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May 28, 2010

FHA Refinance vs Conventional Home Refinancing

Category: Conventional,FHA – admin – 12:38 am

In a recent article, Mortgage Refinancing Buzz compares conventional and FHA refinancing in a side by side analysis.  The mortgage adviser notes that both types of refinance loans have their pros and cons so it all comes down to selecting a refinance program that best meets you individual needs.  In 2010 there were many revisions to underwriting criteria for conventional and FHA loan requirements.  MRB recommends finding out what your loan qualifications are with a mortgage lender you trust.

A conventional refinance loan is a traditional mortgage used to refinance an existing mortgage that stays within the conforming loan limits of $417,000.  FHA streamline refinance allows FHA customers to refinance anytime the market rate drops into a position that would save them money.  During turbulent the FHA refinance loan provides some assurances that if the rates drop, the FHA borrower can reap the benefits.

Read the original Mortgage Refinancing Buzz article > Comparing Conventional Refinance Loans to FHA Refinancing


December 14, 2009

MBA Predicts Higher Mortgage Rates and Less Home Loan Originations

Category: Conventional,Home Loan News,Mortgage Industry News – admin – 6:43 pm

Slowly rising mortgage interest rates along with relatively sluggish home sales will have repercussions in the mortgage industry over the next few quarters according to the Mortgage Bankers Associations Forecast for the Fourth Quarter of 2009.  “The most important factor driving recent declines in real estate market activity and increases in home loan delinquencies and foreclosures has been the ongoing job losses and rising unemployment rates stemming from the most severe recession the country has experienced in a generation.

Current mortgage interest rates, home prices, and household incomes all impact affordability. Today, mortgage rates remain near record lows, and with the continued decline in home prices, for those with resources, it is a buyers’ market like we haven’t seen in years. Obviously, the problem is that there are not enough potential homebuyers who have the income and down-payment, and who feel confident both that the housing market will recover, and that their job situation is secure, to boost demand despite the improvements in affordability.”

MBA economists expect long term mortgage interest rates to raise slowly from the average of 4.9 % expected for the fourth quarter to 5.2% in the first quarter of 2010 and 5.7% in the fourth quarter.  Rates will climb to 6.0% during the second quarter of 2011.  One year adjustable rates are projected to be almost completely flat over the next year.  At 4.6% this quarter, they will trade between 4.7 and 4.8% throughout 2010 and rise to an average of 5.3% in 2011.  At the same time, sales of existing homes, estimated at nearly 5 million this year will continue at that pace through the first three quarters of 2010 before increasing in the fourth quarter for total of 5.55 million sales for that year.  Sales are expected to reach 6 million in 2011.  New home sales, projected to reach an estimated annualized rate of 442,000 in the fourth quarter and 391,000 for the year will move around in a narrow annualized range of 468,000 to 508,000 during the four quarters of 2010 and finish the year with around 483,000 sales. New home sales will total 609,000 in 2011.  All of the above outlined circumstances are expected to result in a slow year for home mortgage originators with home loan originations increasing but not strongly enough to make up for a plunge in home refinancing.  It is expected that purchase mortgages will total 718,000 for this year; 804,000 in 2010 and 896,000 in 2011.  FHA refinance activity is forecasted to be strong, even though HUD recently announced new FHA mortgage lending revisions.

During the fourth quarter it is expected that 238,000 households will seek refinance loans.  This will be the slowest quarter of the year, down substantially from the 426,000 transactions in the second quarter and 296,000 in the third.  The estimate for the entire year is 1,246,000 mortgage refinance loans.  However, next year with interest rates up and much of the demand for refinancing wrung out of the system the number of refinances is expected to plummet to little more than half the 2009 number; 2010 will be even worse.  Refinancing in the first quarter of 2010 will be 175,000 units compared to 287,000 during the first quarter of this year and the total in Q4 will be 140,000 compared to 238,000 this quarter.  MBA is projecting a total of 693,000 refinances in 2010 is estimated at 693,000 and in 2011 the total will be 591,000.  


November 2, 2009

Fannie Mae Refinance Loans to 125%

Fannie Mae provides several refinance options including the Home Affordable Refinance Program.  Fannie Mae refinance solutions are only available eligible borrowers who have a mortgage balance less than $417,000 that is owned by Fannie Mae.  125 mortgage options are available for no equity home refinancing.

Fannie Mae Refinance Plus simplifies the refinancing process for loans that are already in a mortgage lender’s servicing portfolio. This Fannie Mae mortgage program allows refinancing to 125% LTV. The Home Affordable Refinance Programs offers a unique refinance alternative because no equity is required.  Fannie Mae pledges to provide home refinancing with increased efficiencies for the origination and underwriting of Fannie Mae.   Fannie Mae allows limited cash-out refinance transactions up to 125 percent loan to value.


July 20, 2009

Home Mortgage Rates Remain Low

Mortgage rates in the U.S. fell to the lowest since May as mortgage refinance loans surged on reduced borrowing costs. The average thirty-year rate fell to 5.14% from 5.20%, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. The fifteen-year mortgage rate was 4.63%.   “It’s been stuck in this low-five range for a number of weeks,” Donald Rissmiller, chief economist at New York-based Strategas Research Partners, said. “This is still a good interest rate.”  

The Mortgage Bankers Association’s index of home loan applications rose 4.3% to 514.4 in the week ended July 10. Purchase applications fell 9.4 % while requests to refinance gained 18%, indicating prospective buyers are still wary of falling home prices while property owners are taking advantage of low rates to reduce their monthly payments.  Kelly Media Group Founder, Jason Cardiff of the Mortgage Lead Company, said, “The result of lenders cutting fees will trickle down to homeowners and eventually provide a hedge against inflation for the rest of 2009.”

Federal Reserve Chairman Ben S. Bernanke is trying to reduce lending costs with a $1.25 trillion program to purchase securities backed by home loans. According to data compiled by Bloomberg, the worldwide credit crunch spurred by bad credit mortgages has cost the world’s financial firms almost $1.5 trillion in losses and more asset write-downs.

Last month, the Federal Reserve left the size of its buying program intact and kept the benchmark rate for federal funds at between 0 and 0.25 %. The rate will stay at “exceptionally low rate levels” for an “extended period,” the Federal Open Market Committee said in a statement June 24th.   “We’re going to see more of the same out of the Fed,” Rissmiller said. “They’ve been happy with what’s happened.”

April’s Record Low

Mortgage rates reached a record low 4.78 % twice in April after the central bank announced its plan to boost buying of both mortgage securities and Treasuries.   Those purchases brought down yields on government debt and mortgage-backed bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae, allowing lenders to reduce mortgage rates on new home loans and still sell the securities at a profit. Home loan rates started climbing in May along with Treasury yields on investor concern that ballooning government debt would fuel inflation.


October 7, 2008

Countrywide Settles Home Loan Lawsuit and Offers Mortgage Modifications

Category: Conventional,Home Loan News – admin – 11:07 am


Are you a borrower facing mortgage foreclosure? If your mortgage lender was Countrywide Financial, you may be able to save your home.  The New York Times reports that Countrywide Financial has agreed to the largest program ever to modify home loans as part of a settlement with officials in 11 states, including California.

“Countrywide’s greed turned the American dream into a nightmare for thousands of Californians who now face foreclosure,” said Attorney General Jerry Brown, who led the negotiations for the sates with Lisa Madigan, the Illinois attorney general.  Brown expects loans worth $3.4 billion to be modified in California. This new loan modification program is mandatory and will be monitored by state officials. A foreclosure relief fund will be created with $150 million from Countrywide to help borrowers who are four months or more behind on their payments or whose homes have already foreclosed. The company will provide $70 million to help troubled borrowers relocate to rental housing. In all, Countrywide is setting aside $8.7 billion to help borrowers prevent a foreclosure and stay in their home.

Under the terms of the settlement, Countrywide will reduce principal balances in some cases and cut interest rates in others. Mortgage rates could decline to 2.5%, depending upon the borrower’s ability to pay, and remain at that level for 5 years. Then, it will adjust to prevailing Fannie Mae fixed-rate mortgage rates.


The program will focus on borrowers with the riskiest loans including subprime adjustable rate mortgages (ARMs) and exotic hybrid ARMs, including negative amortization pay-option mortgages and interest-only loans. The program begins December 1 as Bank of America contacts homeowners. If you have a Countrywide Financial mortgage loan, you should call to discuss your home loan. 



October 1, 2008

How the Mortgage Market has Changed Lenders and Brokers

Category: Conventional,Editorial,FHA – admin – 10:08 am

The foreclosure phenomenon has changed the lending landscape for some time to come. With Countrywide almost going under before being bailed out by BOF, IndyMac going under, Freddie MAC and Fannie Mae being taken over by the government, Lehman Brothers going bankrupt and Washington Mutual being bought by Citigroup along with all the other continuing financial bad news, the confidence level in U.S. lending institutions is at an all-time low. The San Diego Union-Tribune reports that due to the fear of losing more money on faulty investments, banks have stopped lending to each other and have stopped the flow of so-called commercial paper (essentially corporate IOUs that fund short-term expenses).

The economic stimulus package didn’t have the desired effect, and it’s about to expire in December. Foreclosures are still on the rise, and housing prices are still dropping. The credit crunch hasn’t eased. Instead, it continues to dry up. A first time home buyer who lacks a 20% down payment pretty much can’t get a conventional home loan, especially if they have a credit score of less than 700. FHA remains the best choice for first time home buyers and for those with credit scores of less than 700. That’s not likely to change anytime before the end of next year. It could take longer if Congress continues to disagree on the bailout.  Home loan modifications have increased significantly, as more and more lenders are accepting requests to modify the mortgage note.

While the bailout is not a popular choice, watching the market fall by more than 700 points is a clear indicator of what happens when no action is taken. Also seeing the market rebound on the news that the bailout is being worked on and stands a better chance of passing this time around indicates that action is needed now. It’s time for politicians to stop playing the blame game and get the bailout fixed and passed. Today, there are reports that the bailout has more tax breaks for businesses and alternative energy along with higher government insurance for bank deposits. Democratic opponents of the bill said they would be willing to back an increase of bank deposits of $250,000. Currently, bank deposits of up to $100,000 are insured by the Federal Deposit Insurance Corporation (FDIC). Few details on the revised bailout plan are available, but hopefully the revisions are enough to get it passed.

“The credit markets are in shambles,” says Mark Goldman, finance professor at San Diego State University. “Now we’re seeing it in homes, autos and other big-ticket items. Soon I think we’ll be seeing it in retail, as credit cards dry up. How bad will it get? I don’t think anybody realizes the true depth of the problem.”  Marty Gold, the managing mortgage broker who recently worked with FHA Home Loan Services recently said, “Credit scores are like liquidity to homeowners.” The higher credit scores homeowners have the more opportunities they will have in the future to refinance. As a result, the popularity of FHA purchase loans has surged.

People with credit scores of 620 used to be able to get a car loan without any trouble. Now, scores need to be at least 650, and some places want FICO scores of at least 700. For a home purchase loan conventional home lenders now expect a credit score of at least 680 for someone with a 20% down payment and at least 700 for those with less than 20% startup equity. FHA mortgages still provide lenient credit standards. At this point, lenders require a score of typically around 580. You can still buy a home with a 3% down payment, although that will be increasing to 3.5% in January. If you’re a cash-strapped first time home-buyer or someone with a credit score of less than 700, FHA is your best bet until things ease up.