Payout to 4.2 Million Borrowers Beginning April 12th

There was an agreement between the Office of the Comptroller of the Currency (OCC),  the Federal Reserve Board, and 13 mortgage servicers that will make payments to 4.2 million borrowers starting April 12th. This agreement will provide $3.6 billion in cash payments to homeowners that have found themselves in any stage of foreclosure in 2009 or 2010. Those defaulted loans must have been serviced by by one of the following companies or their subsidiaries  Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The checks will be sent in several waves starting with 1.4 million checks being sent out on April 12th, and ending sometime in mid-July 2013.  The payments are expected to range from $300 to $125,000. There will be a bit of a delay for borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley, but information regarding this is not yet available.

Borrowers who qualify to receive this servicing settlement payout can expect a letter with an enclosed check sent by the paying agent, Rust Consulting, Inc. Rust previously sent postcards to the 4.2 million borrowers to notify them about their eligibility. If you received a postcard but need to update your contact information, call Rust at (888) 952-9105. Any information that you provide to Rust will only be used in regards to the agreement, at the direction of the OCC and the Federal Reserve.  However, you should beware of scams. If anyone asks you to call a different phone number or to pay a fee in order to receive your payment, do not do so. Stop and call the number above. Remember, servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting a payment.

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Take Advantage of a Foreclosure Review

The Federal Reserve has offered homeowners a chance to have a foreclosure review. This basically investigates whether or not you were treated fairly if you had a foreclosure. It is a deal from the Fed and the Office of the Comptroller of the Currency that has been extended until September 30th. Many homeowners, though, are not taking advantage of this review: only 196,000 have. The participating mortgage servicers are expected to choose more cases to review on their own for a total of 338,400 reviews. However, that only accounts for 7.5% of the 4.5 million borrowers who are covered by this enforcement action. In order to qualify for a review, a borrower must have a loan that was serviced by a participating lender, and the house's loan must have been active in the foreclosure process between January 1, 2009 to December 31, 2010. There is no cost for a review. If you are eligible, you should have already been contacted. If not, get in touch with your servicer.

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New Record Low Rates

New Record Low Rates! The average fixed mortgage rate found new record lows, as the 30-year fixed rate mortgage averaged 3.84 percent, down from last week when it averaged 3.88 percent. Last year at this time, the 30-year fixed rate averaged 4.71 percent. The 15-year fixed rate mortgage this week averaged 3.07 percent, down from last week when it averaged 3.12 percent. A year ago around this time, the 15 year fixed rate mortgage averaged 3.89 percent.

"Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week," said Frank Nothaft, the vice president and chief economist of Freddie Mac. "Real Gross Domestic Product rose at an annualized rate of 2.2 percent in the first quarter of this year, down from the previous quarter of 3.0 percent and below the market consensus forecast of 2.5 percent. In addition, the 12-month growth in the core price index of personal consumption expenditures was 2.0 percent in March which matches the Federal Reserve's implied inflation target."

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Mortgage Rates Rise Above 4%

According to Freddie Mac, the 30-year fixed-rate mortgage has risen above 4% for the first time since October. Last year, the rate was averaging 4.81%; right now it is at 4.08%. The rates are thought to be rising as a sign of economic growth. It was the Federal Reserve that helped to push the rates down to record-low levels in the recent past.

U.S. Treasury bond yields have been increasing lately. However, consumers have been able to reduce their debt burdens quite a bit overall. The economy is finally beginning to stabilize.

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Outlook for the Housing Market in 2012

As of December 2011, unemployment rates fell to their lowest level in three years with the addition of 200,000 jobs. This means good news overall for the real estate market since the country's economy is beginning to improve. This recovery is essential for the housing market and it is expected to continue throughout 2012. As we reported earlier, the Fed has announced that interest rates will not be raised until 2014 in the hopes of continuing in this economy recovery. The interest rates are currently at historic lows and are expected to stay that way to ensure a slow but steady rise by the end of the year. Therefore, taking out a mortgage is a very affordable thing at this time.

Predictions for the 2012 housing market include these continued low interest rates as well as the stabilization of home prices. This should lead to an increase in home sales: roughly 12% of existing homes and 74% of new homes; and there will also be a rise in inventory mostly due to increased foreclosures throughout the country. Distressed properties will make up about half of all home sales. There will also be an improved short-sale process so we can further avoid foreclosures. Homeownership rates are expected to continue to fall. Foreign and domestic investors will be likely to buy 25% of homes. And there will be an increased reliance on real estate agents in 2012. We will continue to report on these matters to see if these predictions pan out over the next year.

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Federal Reserve: No Rate Hikes until 2014

According to the U.S. Federal Reserve, interest rates will not be raised until at least late 2014. This is even later than investors were expecting. They are doing this in an effort to support the economy's recovery.

The Central Bank says that the unemployment rate is still elevated throughout the country, however inflation is expected to remain somewhat consistent with stable prices. If economic conditions change, the Fed could actually adjust this time frame, but it is expected that the Fed will not change its record-low rate for nearly three years. So this is good news! We should have low rates for quite a while to come.

While the unemployment rate stands at 8.5%, meaning that some 13 million Americans are still unable to find work, the Fed is optimistic about the unemployment rate for 2012. They expect the U.S economy to grow at a 2 percent annual rate this year.

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News for the Week of Jan 8th: Reports and Auctions

There are four reports that are expected to be released this week that may concern mortgage rates depending on its economic data. Also, two  important treasury auctions will take place.  The Stock Market will be a major contributor early in the week for any movements in bond prices and mortgage rates.

At 2:00 PM ET on Wednesday, the Federal Reserve's Beige Book Report will be released. It will give details of the economic condition throughout the US by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises, particularly regarding inflation, unemployment or future hiring.

Wednesday and Thursday bring the treasury auctions featuring the sale of 10-year-notes and 30-year-bonds. The 10-year sale is the more important of the two as it will give us a better indication for demand of mortgage-related securities. If there is a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.

On Thursday, the most important report of the week is released: December's Retail Sales data. This comes from the Commerce Department. The report measures consumer spending and tracks tracks sales at retail establishments.  Customer spending makes up two-thirds of the U.S. economy so this data is watched carefully. A sales increase of 0.4% is expected.  A smaller than expected increase in sales would indicate consumers did not spend as much as thought over the holiday season, helping to prevent rapid economic growth. That would be considered good news for the bond market and mortgage rates.

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Fed White Paper: "The U.S. Housing Market: Current Conditions and Policy Considerations"

The Federal Reserve wrote a report addressing the current problems in the US housing market. They say that it doesn't cover everything but it is to serve as a "framework for thinking about certain issues and tradeoffs that policymakers might consider."

It discusses the American economy, the unemployment rate, housing foreclosures and more. They may push the government-owned mortgage buyers to rent out the homes they own as a possible way to improve the housing market.

Read all about it by clicking on this link here.

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