The Senate Banking Committee held a hearing Tuesday on housing finance reform, the first of three housing-related hearings on the agenda this week. The issue of government guarantees for mortgages came under fire.
Peter Wallison, a fellow with the American Enterprise Institute in Washington, D.C. , noted in his testimony that the Congressional Budget Office (CBO) recently estimated – even after the recent debt extension agreement – that if current policies are pursued the national debt will balloon from $14.3 trillion today to $23 trillion in 2021.
“Virtually all proposals for U.S. government assistance to the housing finance market assume that it will involve an explicit government guarantee, but even if this guarantee is only implicit — as it was with the government sponsored enterprises Fannie Mae and Freddie Mac – it will make no significant difference except in the budget numbers,” Wallison said.
“The bailout of Fannie and Freddie proved beyond question that this debt is every bit a part of the nation’s debt as the securities are issued by the Treasury,” he added
Wallison says without any change in policies and without any further increase in the GSEs’ debt, the national debt will reach $30 trillion in 10 years.
“With this background, it is hard to believe that there is actually a viable campaign to have the government support the housing market once again,” he told lawmakers from the Senate committee.
Wallison said that the housing finance market can and should principally function without any direct government financial support.
Others scheduled to testify with Wallison were Dwight Jaffee, a real estate and finance professor at the University of California-Berkley; Adam Levin, a law professor at Georgetown University; and Richard Green director and chair of the USC Lusk Center for Real Estate, University of Southern California.
In other sessions on Capitol Hill this week, Wednesday the Senate Banking Subcommittee on Housing, Transportation and Community Development is scheduled to hear new ideas for mortgage loan restructuring and refinancing from Mortgage Bankers Association President and CEO David H. Stevens. No other witnesses are currently scheduled.
Also on Wednesday, the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity will examine HUD’s and NeighborWorks America’s housing counseling programs. Peter Bell, president of the National Reverse Lenders Association and a representative from the U.S. Government Accountability Office are scheduled to testify
Showing posts with label historic mortgage rates. Show all posts
Showing posts with label historic mortgage rates. Show all posts
Wednesday, September 14, 2011
Investment Bank Expects Moderate Government Refinancing Program
While the Obama administration is still working through the specifics with the Federal Housing Finance Agency (FHFA) on how to open up refinancing to more borrowers, Keefe, Bruyette & Woods (KBW) – an investment bank specializing in financial services – notes that the most likely course of action is a moderate expansion of the Home Affordable Refinance Program (HARP) rather than a broad refinance program.
“We expect additional details to be released in the coming weeks but we think chances of a large, blanket refi program have faded and the impact of whatever program the Administration unveils will be modest,” KBW said in one of two recently released research notes.
Even a HARP expansion is likely to be modest at best, the other research note said, pointing out that HARP volume to date has totaled 838,000 loans over two years. Assuming an average loan size of $150,000, this would equate to total volume of roughly $125 billion.
“Even if this number doubles, it would still reflect a small percentage of the roughly $1 trillion in annual mortgage volume,” the research note said. “Further, given industry capacity constraints we believe that prepayments speeds are going to be constrained so an increase in HARP volume is likely to extend the current mini-refinance wave well into 2012.”
KBW said the two most likely changes include eliminating Loan Level Price Adjustments (LLPAs) and marketing directly to eligible borrowers, which is currently prohibited. LLPAs can add 40 to 50 basis points to the rate of borrowers with lower credit scores.
KBW noted: “The main impediment to refinancing older loans is rep and warranty risk for the new originator. This is unlikely to be changed because waiving rep and warranty rights would increase the credit risk for the GSE.”
The research note said any upcoming changes will have only a moderate impact on the Agency mortgage backed securities market
“We expect additional details to be released in the coming weeks but we think chances of a large, blanket refi program have faded and the impact of whatever program the Administration unveils will be modest,” KBW said in one of two recently released research notes.
Even a HARP expansion is likely to be modest at best, the other research note said, pointing out that HARP volume to date has totaled 838,000 loans over two years. Assuming an average loan size of $150,000, this would equate to total volume of roughly $125 billion.
“Even if this number doubles, it would still reflect a small percentage of the roughly $1 trillion in annual mortgage volume,” the research note said. “Further, given industry capacity constraints we believe that prepayments speeds are going to be constrained so an increase in HARP volume is likely to extend the current mini-refinance wave well into 2012.”
KBW said the two most likely changes include eliminating Loan Level Price Adjustments (LLPAs) and marketing directly to eligible borrowers, which is currently prohibited. LLPAs can add 40 to 50 basis points to the rate of borrowers with lower credit scores.
KBW noted: “The main impediment to refinancing older loans is rep and warranty risk for the new originator. This is unlikely to be changed because waiving rep and warranty rights would increase the credit risk for the GSE.”
The research note said any upcoming changes will have only a moderate impact on the Agency mortgage backed securities market
More Than One-Fifth of Mortgages Underwater: Report
Nearly 10.9 million, or 22.5 percent, of all residential mortgages had negative equity at the end of the second quarter of the year, according to a report released Tuesday by the analytics firm CoreLogic.
The figure is actually a slight improvement from the 22.7 percent of all mortgages with negative equity in the first quarter of 2011.
An additional 2.4 million borrowers had less than 5 percent equity in the second quarter, according to the report, which also shows that nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest on their mortgages.
The states that had the most inflated property values before the housing bubble burst, and Michigan, which continues to suffer from the fall off of the automotive and manufacturing industries, had the highest negative equity percentages
Nevada held the top position in terms of negative equity with 60 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (45 percent), Michigan (36 percent), and California (30 percent).
Yet there are some signs that the worst could be over in those states. According to the report, the average negative equity share for the top five states declined from 41 percent to 38 percent during the past year.
Nevada had the largest decline over the last year, with its negative equity share dropping from 68 percent to 60 percent. The reason for the Nevada decline is the high number of foreclosures that led to lower numbers of remaining negative equity borrowers.
“High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery,” said Mark Fleming, chief economist with CoreLogic in releasing the data.
Fleming added, “The hardest hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices.”
According to CoreLogic, 8 million borrowers with negative equity, or nearly 75 percent of all underwater borrowers, have above market rates.
Since the 2005 sales peak, non-distressed sales in ZIP codes with low negative equity have fallen 61 percent, compared to an 83 percent sales decline in high negative equity zip codes.
The figure is actually a slight improvement from the 22.7 percent of all mortgages with negative equity in the first quarter of 2011.
An additional 2.4 million borrowers had less than 5 percent equity in the second quarter, according to the report, which also shows that nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest on their mortgages.
The states that had the most inflated property values before the housing bubble burst, and Michigan, which continues to suffer from the fall off of the automotive and manufacturing industries, had the highest negative equity percentages
Nevada held the top position in terms of negative equity with 60 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (45 percent), Michigan (36 percent), and California (30 percent).
Yet there are some signs that the worst could be over in those states. According to the report, the average negative equity share for the top five states declined from 41 percent to 38 percent during the past year.
Nevada had the largest decline over the last year, with its negative equity share dropping from 68 percent to 60 percent. The reason for the Nevada decline is the high number of foreclosures that led to lower numbers of remaining negative equity borrowers.
“High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery,” said Mark Fleming, chief economist with CoreLogic in releasing the data.
Fleming added, “The hardest hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices.”
According to CoreLogic, 8 million borrowers with negative equity, or nearly 75 percent of all underwater borrowers, have above market rates.
Since the 2005 sales peak, non-distressed sales in ZIP codes with low negative equity have fallen 61 percent, compared to an 83 percent sales decline in high negative equity zip codes.
Friday, September 9, 2011
Mortgage Rates Dip, Reaching Another Record Low
For the second time in a month, fixed and adjustable-rate mortgage rates set new record lows this week, Freddie Mac reports in its weekly mortgage market survey. The previous record lows were set Aug. 18.
Economic uncertainty and employment concerns are continuing to keep rates low, says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending Sept. 8.
30-year fixed-rate mortgages: averaged 4.12 this week, down from last week’s 4.22 percent. The 30-year rates’ previous low was 4.15 percent, set on Aug. 18.
15-year fixed-rate mortgages: averaged 3.33 percent this week, down from last week’s 3.39 percent average. Its previous record low was 3.36 percent.
5-year adjustable-rate mortgages: averaged 2.96 percent, holding steady at the same record low it set last week.
1-year ARMs: averaged 2.84 percent this week, down from last week’s 2.89 percent average. Its previous record low was 2.86 percent.
Despite the low rates, mortgage application volume remains low, dropping for the third straight week, the Mortgage Bankers Association reported this week. The volume of mortgage applications for purchase remained relatively flat this week at “extremely low levels, close to lows last seen in 1996,” says Mike Fratantoni, MBA’s vice president of Research and Economics. Refinance application volume was also down, dropping more than 35 percent below levels last year at this time.
By REALTOR® Magazine Daily News
Economic uncertainty and employment concerns are continuing to keep rates low, says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending Sept. 8.
30-year fixed-rate mortgages: averaged 4.12 this week, down from last week’s 4.22 percent. The 30-year rates’ previous low was 4.15 percent, set on Aug. 18.
15-year fixed-rate mortgages: averaged 3.33 percent this week, down from last week’s 3.39 percent average. Its previous record low was 3.36 percent.
5-year adjustable-rate mortgages: averaged 2.96 percent, holding steady at the same record low it set last week.
1-year ARMs: averaged 2.84 percent this week, down from last week’s 2.89 percent average. Its previous record low was 2.86 percent.
Despite the low rates, mortgage application volume remains low, dropping for the third straight week, the Mortgage Bankers Association reported this week. The volume of mortgage applications for purchase remained relatively flat this week at “extremely low levels, close to lows last seen in 1996,” says Mike Fratantoni, MBA’s vice president of Research and Economics. Refinance application volume was also down, dropping more than 35 percent below levels last year at this time.
By REALTOR® Magazine Daily News
Tuesday, August 30, 2011
REBAC Survey Offers Ideas to Connect With Buyers
The 2011 member survey by the Real Estate Buyer's Agent Council (REBAC), a wholly owned subsidiary of the National Association of REALTORS®, indicates that almost three-quarters of buyers' agents carry smartphones for real-time communications. Another 75 percent regularly use social networking sites to cultivate relationships with buyers, with 65 percent noting a preference for Facebook.
More than 50 percent of those polled use blogs, particularly RISMedia and Inman, to keep abreast of market conditions for their clientele; and more are taking steps to ensure that their Web sites can be viewed on mobile devices. Mortgage rates are at all time lows. Take advantage of this opportunity. Start saving today.
The survey also reveals that members are using innovative ways to thank clients after closings and are promoting their Accredited Buyer's Representative designation on marketing materials. They find that the negotiating skills and technology resources they receive as member benefits to be particularly useful.
Source: "Fresh Ideas to Build Buyer Business," RISMedia (08/29/11)
More than 50 percent of those polled use blogs, particularly RISMedia and Inman, to keep abreast of market conditions for their clientele; and more are taking steps to ensure that their Web sites can be viewed on mobile devices. Mortgage rates are at all time lows. Take advantage of this opportunity. Start saving today.
The survey also reveals that members are using innovative ways to thank clients after closings and are promoting their Accredited Buyer's Representative designation on marketing materials. They find that the negotiating skills and technology resources they receive as member benefits to be particularly useful.
Source: "Fresh Ideas to Build Buyer Business," RISMedia (08/29/11)
More Banks Offer Incentives to Unload REOs
Banks facing high inventories of REOs are turning to financial incentives in the hopes of accelerating sales of these often vacant, deteriorating properties.
For example, Fannie Mae and Freddie Mac are trying to liquidate its REOs, the National Mortgage News reports. By the end of 2010, Fannie Mae was authorizing lenders to offer the HomePath program for Fannie Mae REOs. In the program, which is available to individual buyers and investors, home buyers do not need perfect credit and can put down as little as 3 percent of the property price, qualifying for a loan up to 97 percent of the purchase price.
Also, HUD’s National Community Stabilization Trust “First Look” program is providing competitive prices on REO properties and giving buyers priority access to these homes before they are broadly listed for sale. Trying to Find A Lower Mortgage Rate? Your Search is Over. See How Much You Can Save.
Some cities are coming up with their own programs to stimulate sales. For example, JPMorgan Chase recently teamed with Detroit city officials to offer down payment assistance to police officers and city employees who purchase a vacant home in the city over the next two years. The first buyers will receive $25,000 in down payment assistance, while 60 other buyers will receive up to $15,000.
Source: “REO Incentives Accelerate,” National Mortgage News (Aug. 29, 2011)
For example, Fannie Mae and Freddie Mac are trying to liquidate its REOs, the National Mortgage News reports. By the end of 2010, Fannie Mae was authorizing lenders to offer the HomePath program for Fannie Mae REOs. In the program, which is available to individual buyers and investors, home buyers do not need perfect credit and can put down as little as 3 percent of the property price, qualifying for a loan up to 97 percent of the purchase price.
Also, HUD’s National Community Stabilization Trust “First Look” program is providing competitive prices on REO properties and giving buyers priority access to these homes before they are broadly listed for sale. Trying to Find A Lower Mortgage Rate? Your Search is Over. See How Much You Can Save.
Some cities are coming up with their own programs to stimulate sales. For example, JPMorgan Chase recently teamed with Detroit city officials to offer down payment assistance to police officers and city employees who purchase a vacant home in the city over the next two years. The first buyers will receive $25,000 in down payment assistance, while 60 other buyers will receive up to $15,000.
Source: “REO Incentives Accelerate,” National Mortgage News (Aug. 29, 2011)
HUD Extends Unemployed Mortgage Relief Program
The Department of Housing and Urban Development has once again extended its deadline for a program that provides up to $50,000 in interest-free loans to unemployed or medically ill home owners who are struggling to make their mortgage payments.
The new deadline is now Sept. 15. HUD resumed taking applications for the program on Monday. Are You Looking to Refinance? Don't wait! Lock in at record low rates. Start today and start saving.
The $1 billion Emergency Homeowners Loan Program, which launched in June, was originally slated to end on July 22, but HUD first extended the deadline to July 27 to give home owners more time to apply.
Home owners eligible for the program will be able to qualify for up to $50,000 in interest-free loans for up to two years. Home owners who have had a drop in income of at least 15 percent from involuntary unemployment or underemployment due to economic conditions or a medical emergency are eligible for the program. Home owners must still be able to contribute $150 per month toward their mortgage. (Learn more about eligibility requirements and the participating states at http://findehlp.com.)
Source: “HUD Extends Deadline for Unemployed Mortgage Assistance,” HousingWire (Aug. 29, 2011)
The new deadline is now Sept. 15. HUD resumed taking applications for the program on Monday. Are You Looking to Refinance? Don't wait! Lock in at record low rates. Start today and start saving.
The $1 billion Emergency Homeowners Loan Program, which launched in June, was originally slated to end on July 22, but HUD first extended the deadline to July 27 to give home owners more time to apply. Home owners eligible for the program will be able to qualify for up to $50,000 in interest-free loans for up to two years. Home owners who have had a drop in income of at least 15 percent from involuntary unemployment or underemployment due to economic conditions or a medical emergency are eligible for the program. Home owners must still be able to contribute $150 per month toward their mortgage. (Learn more about eligibility requirements and the participating states at http://findehlp.com.)
Source: “HUD Extends Deadline for Unemployed Mortgage Assistance,” HousingWire (Aug. 29, 2011)
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