Archive for the 'Industry News' Category
NJ Mortgage Assistance Sites
NJ Mortgage Assistance Sites
-
If you are having trouble paying back your mortgage, help is available. Do not be embarrassed. Do not panic. But most importantly, do not do nothing. …
www.state.nj.us/dobi/njhope/ – Cached – Similar
-
NJHMFA, HMFA, Housing and Mortgage Finance Agency. … Foreclosure Assistance help for new jersey homeowners · http://www.state.nj.us/dca/hmfa/ …
www.state.nj.us/dca/hmfa/ – Cached – Similar
-
Foreclosure Assistance: Please advise if any of the following links fail indicating which one by sending a reply to this post.
mortgage-assistance-in-nj.new-jersey.aidpage.com/ – Cached – Similar
- Local business results for mortgage help near New Jersey
-
NJ.com: Shop Jersey. … Latest Mortgage Rates: Check up-to-date rates from New Jersey mortgage lenders; Email Questions to Lenders …
Mortgage Help Center …
www.nj.com/mortgagecenter/ – Cached – Similar
-
NJ.com: Shop Jersey. …
Mortgage Center Find rates, compare loans and learn about buying a home …
Mortgage Help Center …
www.nj.com/mortgagecenter/index.ssf/helpcenter – Cached – Similar
-
Need help buying a home? You may qualify for one of these programs. …
New Jersey Housing & Mortgage Finance Agency (NJHMFA) …
Atlantic – Bergen – Burlington – Camden
www.hud.gov/local/nj/homeownership/buyingprgms.cfm – Cached – Similar
-
Sep 8, 2008 …
New Jersey Help For Foreclosures. Homeowners who are struggling to make payments in New Jersey may have an opportunity to get out of their …
www.fhamortgagecenter.com/…/new-jersey-help-for-foreclosures/ – Cached – Similar
-
Program rules may give housing administrators some flexibility to help families … The New Jersey Housing and Mortgage Finance Agency (HMFA) has many …
www.nj.gov/dca/codes/affdhousing/affdhsgguide/index2.shtml – Cached
-
Find New Jersey Mortgage Lenders at Mortgage Lenders Plus.com. … lending laws in order to help protect New Jersey homebuyers from predatory lenders. …
www.mortgage-lenders-plus.com/mortgage/new-jersey-mortgage-lenders.html – Cached – Similar
Financial Reform Bill: What most people don’t know…
What’s in the Financial Reform Bill?
The broadest overhaul of U.S. financial rules since the Great Depression won final approval in the Senate on Thursday. Yet over 70 percent of Americans know nothing about the legislation.
By a vote of 60 to 39, the Senate gave final approval to a sweeping measure that tightens regulations across the financial industry.
In comments to CNBC Thursday, Democratic Senator Chris Dodd, a co-sponsor of the bill, noted that the sweeping measures passed by Congress won’t necessarily prevent a future financial crisis, but instead will “minimize the possibility” of another “near-meltdown.”
“The suggestion that any bill can stop future crises is ridiculous,” Dodd said. “The issue is whether we’ve got now the oversight council to keep an eye on what’s occurring.”
Also Thursday, President Barack Obama hailed congressional passage the regulation, saying it will provide greater financial security to Americans and would foster accountability.
“All told, this reform puts in place the strongest consumer financial protections in history and it creates a new consumer watchdog to enforce those protections,” Obama said in a press conference.
“Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes and there will be no more tax payer funded bailouts,” he continued. “If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy.”
Obama will likely sign the bill into law next week, the White House said.
The legislation, which had been opposed by banks, leaves few corners of the financial industry untouched. It establishes new consumer protections, gives regulators greater power to dismantle troubled firms, and limits a range of risky trading activities by banks in a way that would curb their profits.
The Senate vote caps more than a year of legislative effort after Obama proposed reforms in June 2009. The House of approved it last month.
Despite the landmark overhaul, 38 percent of Americans have never heard of the legislation and 33 percent have heard of it but know almost nothing about it, according to an Ipsos Public Affairs online poll. Another 18 percent said they know “a little bit” about the measure.
The Ipsos poll found 3 percent are very familiar with the legislation, and 8 percent are somewhat familiar.
Now that the bill is set to become law, here’s a rundown of the key elements:
TITLE I. Systemic Risk
A council of regulators chaired by the secretary of the Treasury would be created to monitor big-picture risks in the financial system. The Financial Stability Oversight Council could identify firms that threaten stability and subject them to tighter oversight by the Federal Reserve. The Fed and the council could break up firms that have not responded to earlier measures and pose an urgent threat.
TITLE II. Ending Bailouts
The bill would set up an “orderly liquidation” process that the government could use in emergencies, instead of bankruptcy or bailouts, to dismantle firms on the verge of collapse.
The goal is to end the idea that some firms are “too big to fail” and avoid a repeat of 2008, when the Bush administration bailed out AIG and other firms but not Lehman Brothers. Lehman’s subsequent bankruptcy froze capital markets.
Under the new rule, firms would have to have “funeral plans” that describe how they could be shut down quickly.
The Federal Deposit Insurance costs for running liquidations would be covered in the short term by a Treasury credit line, then recouped by sales of the liquidated firms’ assets. In case of shortfalls, costs could be further covered by claw-backs of any payments to creditors that exceeded liquidation value, and fees charged to other large firms.
The FDIC could guarantee the debts of solvent insured banks to prevent bank runs. But this could only happen if the boards of the FDIC and the Fed decided financial stability was threatened, Treasury approved the terms, and the president activated a rapid process for congressional approval.
TITLE III. Supervising Banks
The U.S. Office of Thrift Supervision, which was widely criticized in the run-up to the 2007-2009 credit crisis, would be closed and most of its duties shifted to the Comptroller of the Currency.
Banks would be barred from converting their charters to escape regulatory enforcement actions.
The FDIC’s deposit insurance coverage would be permanently raised to $250,000 per individual from $100,000.
TITLE IV. Hedge Funds
Private equity and hedge funds with assets of $150 million or more would have to register with the Securities and Exchange Commission, exposing them to more scrutiny. Venture capital funds would be exempted from full registration.
Investment advisers would have to manage assets of $100 million or more to be federally regulated, an increase from the present $30 million level. The change would shift some of the oversight for small firms from the SEC to the states.
TITLE V. Insurance
A new federal office would be created to monitor, but not regulate, the insurance industry, which is now policed only at the state level. The move would appease opponents of centralized regulation by keeping real power out of Washington’s hands, while giving big insurers that want a single regulator a foothold they might be able to expand from in the future.
TITLE VI. Volcker Rule And Bank Standards
Under a rule proposed by White House economic adviser Paul Volcker, the bill would bar proprietary trading unrelated to customers’ needs at banks that enjoy government backing, with some of the details of implementation left up to regulators.
Banks could continue to invest up to 3 percent of their Tier 1 capital in private equity and hedge funds, not to exceed 3 percent of any single fund’s total ownership interest.
Private equity and hedge fund interests above the new caps would have to be divested over time, under the Volcker rule.
In addition, the largest banks’ ability to expand would be limited by a new cap on share of industry-wide liabilities.
Non-bank financial firms supervised by the Fed would face limits on proprietary trading and fund investing as well.
Bank holding companies within five years would have to stop counting trust-preferred securities and other hybrids as Tier 1 capital, a key measure of a bank’s balance sheet strength.
Firms with assets under $15 billion could count current holdings of hybrids as Tier 1 capital, but not any new ones.
The bill would also require credit exposure from derivative transactions to be added to banks’ lending limits.
In addition, bank capital standards could not sink below those already on the books, and a 15-to-1 leverage standard could be imposed on firms that threaten financial stability.
The bill would also make bank holding companies follow higher capital standards observed by bank subsidiaries.
Analysts expect the Volcker rule and related changes to cut profit at firms such as Bank of America, Goldman Sachs, Morgan Stanley and JPMorgan Chase.
TITLE VII. Over-The-Counter Derivatives
The bill would impose regulation for the first time on the $615 trillion over-the-counter derivatives market, including credit default swaps like those that dragged down AIG.
Much OTC derivatives traffic would be rerouted through more accountable and transparent channels such as exchanges, electronic trading platforms and central clearinghouses.
Banks would also have to spin off the riskiest of their swap-clearing desk operations, but could keep many swaps in-house, including derivatives to hedge their own risks.
Some end-users of OTC derivatives would be exempted from central clearing requirements. Swap-dealers’ ownership interests in clearinghouses would be limited.
JPMorgan, Bank of America and other commercial banks could face structural changes from the bill, while it could boost business for clearing and trading venues such as CME and Intercontinental Exchange, analysts said.
TITLE VIII. Payment, Clearing And Settlement
Supervision of firms that settle payments among financial institutions would be broadened.
TITLE IX. Protecting Investors
On brokers and how they interact with investors, the SEC, after a study, could order brokers who give investing advice to follow a higher standard of client care.
On credit rating agencies, a new SEC office to regulate the agencies would be created. The SEC would have two years to study the widely criticized industry. Afterward, unless it comes up with a better idea, the agency would have to implement a plan to form a government panel to assign agencies to debt issuers for initial ratings of new structured securities.
Rating agencies would also be exposed to more legal risk.
On debt securitization, lenders that make loans and then sell them off as securities would have to retain at least 5 percent of the loans’ risk on their books, unless the loans meet certain standards for reducing risk.
The SEC’s enforcement powers would be beefed up and its funding levels raised.
On executive pay, shareholders periodically could cast non-binding votes on top managers’ compensation packages, while their role in electing directors would also be enhanced.
Corporations would have to allow claw-backs of executive pay if it was based on inaccurate financial information.
TITLE X. Protecting Consumers
A new government watchdog would be established to regulate mortgages, credit cards and other consumer financial products.
The Consumer Financial Protection Bureau would be a separate unit within the Fed and funded by the central bank. It would consolidate consumer programs now dispersed across several agencies. Its director would be nominated by the president and confirmed by the Senate.
The CFPB would answer, in some instances, to the Financial Stability Oversight Council. Car dealers, who fought for and won an exemption, would be beyond the watchdog’s reach. Fees charged on debit-card transactions would be limited.
TITLE XI. Federal Reserve
The Fed’s emergency lending would be exposed to congressional scrutiny, but not its decisions on interest rates. New limits would be placed on the Fed’s so-called 13(3) emergency lending authority
TITLE XII. Financial Access
Programs would be supported to help people without bank accounts to open them and to improve access to small loans and enhance financial literacy.
TITLE XIII. Funding
The costs of the reform bill would be met by funds raised from shutting down the $700 billion Troubled Asset Relief Program, and increasing the amounts of money that banks must pay to insure their deposits.
An earlier funding plan that targeted a new tax at large Wall Street banks and financial firms was dropped after some Senate Republicans complained about it.
TITLE XIV. Mortgage Reform
Mortgage lenders would have to assess borrowers’ ability to repay before making a loan. Pre-payment penalties against borrowers and bonuses to lenders known as “yield spread premiums” would be barred, with violators facing penalties.
Other new protections would be set up for borrowers aimed at ending predatory and abusive mortgage lending practices.
Posted by: Shmuel Shayowitz, Approved Funding
Don’t chase rates — find the right mortgage too
Don’t chase rates — find the right mortgage too
A look at the various scenarios and what might work best for you
(AP) NEW YORK — For those who can qualify, it’s one of the best times to get a mortgage.
Last week, rates for 30-year fixed-rate loans dropped to 4.57 percent, the lowest level on records dating back to 1971, Freddie Mac said.
And for some who missed out on the government’s homebuying tax credit, the rates may more than make up for that lost $8,000.
“A tax credit is immediate gratification,” said Leonard Baron, a professor of finance at San Diego State University, “but long-term, with rates this low, you can get much more value.”
But which loan is right for you? The mortgage game has changed since the housing bust and more rules have been and are being added. One factor is for sure now: Your credit score should be at least 620 or you’ll have a hard time finding a loan. What varies is how much you have for a downpayment.
Buyer No. 1: You have a 20-percent downpayment and expect to retire in the house.
Take out a 30-year fixed-rate loan, the most popular type of mortgage. The interest rate stays the same over the life of the loan and right now, that rate is at historical lows.
“This loan is for someone interested in stability and security,” said John Stearns, mortgage banker at American Fidelity Mortgage Services Inc. in Mequon, Wisc.
Buyer No. 2: You have a 20-percent downpayment, but plan to move into another home down the road.
Consider a five-, seven- or 10-year adjustable-rate loan, which has a fixed rate for a set period and then adjusts higher after that time. These loans carry a lower initial interest rate than the 30-year fixed-rate, so you save money over the fixed-rate period. After the fixed-rate period ends, borrowers typically refinance into another loan to avoid the adjustable rate.
Rates on five-year adjustable-rate mortgages averaged 3.75 percent this week. That was the lowest on Freddie Mac’s records, which date back to January 2005.
ARMs got a bad rap during the housing bust because most people who took out two- or three-year ARMs got caught with an unaffordable payment when their rates reset. They couldn’t refinance into a fixed-rate loan because home prices had tanked and credit tightened up.
That risk still exists, but starting in September, lenders will have to evaluate whether borrowers can make payments after the rate reset on adjustable-rate loans backed by Fannie Mae.
Buyer No. 3: You have at least a 20-percent downpayment for a house worth more than $729,500.
You need a so-called jumbo loan which is not backed by Fannie Mae and Freddie Mac. That means any lender who makes a mortgage above that amount will have to keep the loan on its books.
To compensate for that risk, lenders charge higher interest rates than a conventional mortgage. The average rate for a 30-year fixed-rate jumbo loan fell to 5.48 percent this week, the lowest level ever in Bankrate.com’s survey.
Buyer No. 4: You have more than a 20-percent downpayment.
Depending on how much you’re putting down, you might consider a 20-year fixed-rate mortgage. Rates are sometimes, but not always, lower than a 30-year fixed-rate by about a quarter-point. However, because the loan term is shorter on the 20-year loan, the monthly payment will be higher than a 30-year mortgage.
For example, the monthly payment for a 20-year fixed-rate loan for $300,000 is $1,898. It’s only $1,565 a month if the loan is 30 years. But over the life of the loan, you’ll save about $108,000 in interest.
“Most people are interested in a lower monthly payment,” Stearns said.
Buyer No. 5: You have less than a 20-percent downpayment.
Consider a mortgage insured by the Federal Housing Administration, or FHA. A borrower needs to put down only 3.5 percent of the purchase price.
After the housing market slumped, the FHA became the major source of funding for first-time homebuyers. It insured about 24 percent of new loans in the first quarter, according to Inside Mortgage Finance, a trade publication.
Or, consider a mortgage loan that isn’t backed by the FHA, which only requires 5 percent down. However, you will pay mortgage insurance each month, which can add an extra $25 to $50 to your monthly payment depending on your credit score. Private mortgage insurance protects a lender against losses when a borrower defaults. If you have very good credit, this option may be cheaper.
Buyer No. 6: You have a gift downpayment.
While one in five first-time homebuyers used a gift from a relative or friend for a downpayment last year, there are some rules to navigate.
Gift money can be used for a downpayment on a conventional loan only after the borrowers use their own money to make the 5-percent minimum. Gift money can pay for closing costs or prepaid expenses like property taxes and insurance that are put into an escrow account. Banks typically check two months’ worth of bank statements for unusually odd deposits that could be considered gifts. However, if the gift was deposited six months before, a bank might not notice.
However, FHA mortgages allow borrowers to use a gift to make the 3.5-percent minimum downpayment. The gift must be documented in writing and the lender may ask for proof of deposit.
Buyer No. 7: You don’t have a downpayment.
Your options are limited.
If you are a veteran or the surviving spouse of one, consider a mortgage backed by the Department of Veteran Affairs. These loans offer 100 percent financing without private mortgage insurance at competitive mortgage rates.
If the home you’re buying is in a rural area as defined by the U.S. Department of Agriculture, you may qualify for a USDA home loan, which offers 100 percent financing without adding on private mortgage insurance. The USDA aims to help lower-income households get home loans at reasonable rates.
Source: Associated Press
Post: Shmuel Shayowitz, Approved Funding
Comments are off for this postMortgage Delinquencies Are Coming In All Shapes and Sizes…
Biggest Defaulters on Mortgages Are Now the Very Rich
LOS ALTOS, Calif.—No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.
Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”
The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago—like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.
In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.
“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios—that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”
The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.
Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.
At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.
At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.
Fannie Mae and Freddie Mac , the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.
In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.
The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.
The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.
With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”
Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.
“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”
The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.
“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.
The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.
In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.
In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.
The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.
The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.
But this is still Silicon Valley, where failure can always be considered a prelude to success.
In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.
His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.
“I’m going to be downsizing,” he said.
The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”
This story originally appeared in the The New York Times
URL: http://www.cnbc.com/id/38163917/
Freddie Mac Weekly Interest Rate Survey July 8, 2010
Today Freddie Mac released their weekly survey report on mortgage interest rates. The official press release from their website is below, but here are the highlights as it relates to mortgage shoppers today:
- The survey in this report only encompasses rates from last Wednesday through this past Tuesday evening
- The rates being published are “national” and each region has a slightly different average, with the NorthEast being higher.
- The rates being published are with a fee of an average of .70% in points
- The rates are inaccurate for TODAY’s pricing as the MBS market has seen a sell off starting Wednesday, June 30th (See chart below)
Also very important to read our post regarding the Freddie Mac Weekly Survey >>CLICK<<
And don’t forget our resource centers to learn more:
Links: HomeBuyers HomeOwners RateWatch LoanProducts
____________
JULY 8, 2010 FREDDIE MAC: FOR IMMEDIATE RELEASE
30-YEAR FIXED RATE MORTGAGE DROPS SLIGHTLY TO CREATE ANOTHER NEW LOW
15-Year Mortgage Rises Very Moderately
McLEAN, VA — Freddie Mac (OTC:FMCC) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.57 percent with an average 0.7 point for the week ending July 8, 2010, down from last week when it averaged 4.58 percent. Last year at this time, the 30-year FRM averaged 5.20 percent. This rate is yet another all-time low in Freddie Mac’s 39-year survey.
The 15-year FRM this week averaged 4.07 percent with an average 0.7 point, up from last week when it averaged 4.04 percent. A year ago at this time, the 15-year FRM averaged 4.69 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.75 percent this week, with an average 0.7 point, down from last week when it averaged 3.79 percent. A year ago, the 5-year ARM averaged 4.82 percent. This rate is also an all-time low since Freddie Mac began tracing it in 2005.
The 1-year Treasury-indexed ARM averaged 3.75 percent this week with an average 0.7 point, down from last week when it averaged 3.80 percent. At this time last year, the 1-year ARM averaged 4.82 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“With mortgage rates falling to historic lows, refinance activity has been strong over the past three months,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The Bureau of Economic Analysis reported that the effective mortgage rate of all loans outstanding was just below six percent in the first quarter of 2010, the lowest since the series began in 1977. Since the start of the second quarter, two out of three mortgage applications on average were for refinancing, according the Mortgage Bankers Association.
“Household balance sheets also improved in other ways over the first three months of the year. The Federal Reserve (Fed) reported household net worth rose by almost $1.1 trillion in the first quarter of 2010. The share of credit card loans that were 30-days or more past due fell to the lowest since first quarter of 2002, according to the American Bankers Association. Finally, the aggregate household debt burdens were at a level not seen since the third quarter of 2000, based on the Fed’s debt service ratio.”
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.
Unemployment Is No Longer A Lagging Indicator
The report below by CNBC is an important identification about how the Unemployment numbers are now a very important contributing factor to economic indicators and market movement. We have been saying this for over 18months now, and it’s finally nice to see the media catch up J – Posted by: Shmuel Shayowitz
___________________________
CNBC Report: Unemployment Is No Longer A Lagging Indicator
Unemployment has shifted from a lagging indicator to a leading one and is warning government 
policymakers to confront problems in an economy mired in slow growth, Pimco co-CEO Mohamed El-Erian told CNBC. The consideration of unemployment as a lagging indicator is a favorite mantra among economists who believe the rate primarily looks at the past rather than what is to come.
But the internal details of current trends paint a different picture: More than half the labor force out of work for more than 26 weeks, the average length of unemployment at greater than 35 weeks, and the unemployment rate of 25.7 percent for 16- to 19-year olds.
“These are structural aspects which cannot be solved overnight, cannot be solved with a cyclical mindset,” El-Erian said. “And they are worrisome because they make the unemployment rate not only a lagging indicator but also a leading indicator.”
The US has been “an outlier” among nations who have been confronting the challenges posed by what Pimco, the world’s largest bond fund with more than $1 trillion in assets under management, calls the “new normal” of prolonged slow growth.
“Somehow in the US we are caught in this active inertia that results in just a cyclical response,” said El-Erian, the firm’s co-CEO. “We need more than that. We need cyclical and structural.”
He cited China, Brazil and Russia specifically as countries that have taken more proactive approaches to their problems. While other nations have looked at austerity and structural reform, the US is saying, ‘Hey, what we need is growth.’ What you need is harmonization that is about growth, is about austerity and critically is about structural reform.”
As for investors, El-Erian said stock prices are “getting toward fair value. We’re not quite there yet because I don’t think analysts quite understand what the new normal looks like in terms of lower growth and lower top-line revenue growth, but we’re getting there.”
He said the bond market, with the yield on the benchmark 10-year Treasury note yield below 3 percent, is close to fair value.
A double-dip recession, which has gathered more talk about economists, is a “risk scenario” but not what Pimco considers the most likely event, he said.
“We find it striking that consensus, which used to romance a ‘V’ (recovery) is now moving toward what we’ve been calling the new normal, and some people are going right through the new normal and romancing a double-dip and a depression,” El-Erian said. “What you’re seeing is a move in consensus that has repriced the bond market and is repricing the equity and credit markets.” CNBC.com Staff Writer By: Jeff Cox – Unemployment No Longer a Lagging Indicator: El-Erian
Comments are off for this post
A Note about the weekly Freddie Mac Rate Survey
Freddie Mac released their weekly survey stating the national average of 4.6% rate.
Most of the news media forget to mention 3 important points:
First, that the average they were quoting required about 3/4 of a point extra in fees for a buy-down to get that rate.
Second, the survey is broken down by region and the NorthEast was actually a drop higher than the national average.
Third, most if not all releases often omit important stats or caveats that get the rates to appear very low. Not all applicants can qualify for these rates. The rates are tied into specific loan-to-value and credit score benchmarks.
On average every 1/2 point (.50%) fee that a person pays extra to buy-down the rate will save them 1/8 (.125%) in the interest rate. So the real rate according to this is 4.75% with approximately a 1/4 point (.25%) extra in fee for that rate. [Note: A "point" represents 1% of the Loan Amount; ie $3,000 on a $300,000 mortgage].
Ever since the Government took over Fannie and Freddie, these weekly announcements by Freddie Mac are becoming more and more public media campaigns than anything else.
What’s worse, is that many banks are not passing on the full benefit to mortgage bankers or brokers, because they are either at capital capacity and want to slow down business, or because they are building in a small “margin” to help offset their run-off of loans that they have on their books (portfolios) that they are losing to refinancing.
That said, at the end of the day — rates are definitely at historical levels!
Borrowers face new set of credit checkups
Borrowers face new set of credit checkups
Initiative targets last-minute changes in finances
Mortgage giant Fannie Mae rolled out its Loan Quality Initiative (LQI) June 1, thereby forcing homebuyers to obtain mortgages based on “refreshed” credit reports or risk their closing being canceled and, in some states, their deposits forfeited.
In other words, the buyer is not officially approved for the mortgage until the results of second credit report are approved. There may be other last-minute verifications of undisclosed liabilities, such as job status, that may be “refreshed” as well.
Example:
Buyer A listed his three credit cards on his loan application. The lender approved Buyer A’s credit and approves the mortgage loan request, partially based on this information. Buyer A goes to Home Depot, applies for yet a fourth credit card.
The day before the closing, while Buyer A’s excitement is peaking, the lender refreshes his credit to make sure his credit score is still as good as it was when it was pulled the first time.
The lender discovers that Buyer A’s credit score has been lowered because Buyer A applied for a fourth credit card. It’s called finding an “undisclosed liability,” and it is not going to end well for the buyer.
Under the LQI, the lender could delay the closing, increase the interest rate, ask for a larger downpayment, or cancel the closing. In some states, Buyer A could lose his deposit.
“The impact on closings is too early to measure,” according to Gail Stanley, an Orlando mortgage lender, “but my guess is that homebuyers will be well coached.
“What lender, mortgage broker or real estate broker isn’t going to use every communications tool available to make sure the buyer does not even think about using available credit, much less apply for more during the ‘refreshing’ period?” Stanley asked.
“The mortgage lending business as we have known it is over,” according to Boston’s MetLife Home Loans’ senior mortgage consultant, Brian Cavanaugh. “Quality loan service and counseling will replace rate shopping because mortgage pricing is so competitive.
“Homebuyers need to work with loan officers who clearly understand the new guidelines and can help the buyer understand the importance of complying with them. Mortgage financing is incredibly important in personal financing now and it needs to be understood and protected,” Cavanaugh said. Stanley said that pulling the second credit report is not new, and that the LQI will be a welcome new tool for lenders who practice responsible lending.
“We all realize that buyer qualifications need to be tightened and that the lender needs to be protected. Consumer education is the challenge,” Stanley said. “Realtors need to encourage their buyers to be as complete as possible in the original application and to be careful not to do anything that will negatively impact their credit score before the escrow closes.”
Depending on the state and the standard purchase and sale agreement used, borrowers could lose their deposits, according to Boston attorney Richard D. Vetstein. He recommends that real estate attorneys review standard purchase agreements.
Vetstein posted some advice about Fannie Mae’s LQI on his Massachusetts Law Blog. “If you’ve taken out new loans that are sizable enough to affect the debt-to-income-ratio calculations used in your original mortgage approval, the deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget,” he notes.
Also, “Many lenders already pull second credit reports right before the closing, but the Fannie Mae mandate will likely result in a markedly increased number of lenders pulling second credit reports and performing other last-minute verifications.” And Vetstein states that a surge in new use of existing credit sources could also impact consumers’ ability to secure a home loan.
But holding the buyer accountable pales in comparison to the stringent accountability now in place to prevent lenders from submitting contract products for sale to Fannie Mae with “undisclosed” liabilities. (See www.efanniemae.com, keyword: Loan Quality.)
Just as lenders are calling for refreshed truth from buyers, Fannie Mae is not asking — it is forcing lenders to upgrade the quality of their underwriting and to get used to the new system and embedded, stringent accountability tools for meeting clear, detailed and tougher underwriting standards.
Fannie Mae’s ultimate goal is not to punish the lender or homebuyer. It is to be repaid. Not only will profits start flowing again, but investors will return. And when that happens, loans will become easier to obtain.
There will no doubt be faults found with Fannie Mae’s Loan Quality Initiative, but “lack of accountability” will not be one of them. It is a welcomed and refreshing thought.
http://www.inman.com/news/2010/06/23/borrowers-face-new-set-credit-checkups
By Dave Fletcher/Inman News, Wednesday, June 23, 2010
Comments are off for this postFHFA Announces Home Valuation Code of Conduct
Washington, DC – Federal Housing Finance Agency (FHFA) Director James B. Lockhart announced that Fannie Mae and Freddie Mac will implement a revised Home Valuation Code of Conduct (Code) effective May 1, 2009. The Code is based on 
an agreement between the Enterprises, the New York State Attorney General Andrew Cuomo and FHFA to improve the reliability of home appraisals. Following a comment period on the original Code, modifications were made by the Enterprises to reflect comments received. The revisions will facilitate implementation in the marketplace.
The revised Code builds on existing Fannie Mae and Freddie Mac seller-servicer guidelines to increase the reliability of appraisals for loans sold to the Enterprises for their portfolios or for securitization. The Code applies to lenders that sell single-family mortgage loans to the Enterprises beginning May 1, 2009 and will help assure that borrowers, homebuyers and secondary mortgage market investors receive fair and independent property valuations.
“The Enterprises have a strong interest in ensuring the soundness of the appraisal practices that lead to appraisal reports supporting the mortgage loans they purchase from lenders,” said Director Lockhart. “FHFA supports this effort by the Enterprises to strengthen the appraisal process against the possibility of improper influence and coercion. The Code strikes a balance of assuring enhanced protections for appraisers while maintaining lender ability to address unprofessional appraisal practices and to perform quality controls on appraisals received. I appreciate the work of Fannie Mae and Freddie Mac on the Code and of the Attorney General’s Office throughout the process.”
Fannie Mae and Freddie Mac will be providing information on the Code to market participants in early January to address implementation questions in advance of the May 1, 2009 effective date.