Is Freddie Mac Betting Against You?

The Government-Owned Mortgage Company, Freddie Mac who specializes in helping homeowners get affordable mortgages, has reportedly been "betting" against homeowners. The "bet" comes in the form of investing in securities called "inverse floaters" that will receive all the interest payments from specified mortgage-backed securities. Basically, the bet will pay off if people cannot refinance. The shocking thing is that these investments are actually legal. If people were to pre-pay their old loans and refinance them to receive cheaper new loans, Freddie Mac would lose money. However, the more people that cannot refinance, the more money Freddie makes because it will receive money from these older loans with higher interest payments. The thing that is causing such an outrage among Americans...

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Economic Struggle: Underwater Mortgages Hindering Job Search

Many American homeowners are finding it increasingly difficult to apply for jobs because of their housing situation. Homeowners who are strapped to the mortgage of an underwater home seem to be having difficulty leaving it. This means that job relocation rates are suffering.  The number of people who are willing to relocation during this recession is at 13.2%, but the average relocation rate since 2009 has been around 7.9%. Despite needing jobs in this rough economy, many are forced to stay where they are and pass up far-away employment opportunities because of their mortgages and financial burdens. This in turn effects employer's long-range growth. Once they run out of local options, they will need to rely on those willing to relocate  in order to prevent their company's expansion...

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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...

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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...

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Current U.S. Unemployment Rates

Because Housing and Jobs are so closely related, it is important to watch for changing trends in the Unemployment level. The chart below displays current levels of Unemployment by state. ...

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Reported $25 Billion Deal Reached between Banks and AGs

As we mentioned yesterday, this $25 billion deal between the five largest banks in American and U.S. State Attorneys General nationwide will make it easier for those facing foreclosure to restructure their loans. The final draft of this agreement has been submitted for review. This settlement would apply to privately-held mortgages that were issued between 2008-2011. It does not, however, apply to loans held by GSEs Fannie Mae or Freddie Mac. This means that nearly 750,000 homeowners could get the principal amount of their mortgages written down by $20,000. Under the terms of this deal, $17 billion would be used toward reducing the principal that homeowners owe on their mortgages. Also, $5 billion would be placed in a reserve account for various state and federal programs. Part of that money...

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Congressional Push for Fannie/Freddie Principal Reduction

Congressional Democrats are currently pushing for a Fannie Mae and Freddie Mac Principal Reduction. If a settlement with banks isn't helpful enough for homeowners, they want a federal housing regulator to write down mortgage principal for these government-backed loans. The federal government is actually very close to coming to an agreement with mortgage servicers that could help nearly a million homeowners. The deal would require the nation's five largest banks -JP Morgan Chase, Wells Fargo, Bank of American, Citigroup and Ally Financial- to spend more than $25 billion to help borrowers who had signed off on foreclosure paperwork without reviewing the documents properly. It is not yet clear who would be eligible for this settlement that would offer 1 million borrowers an average of $20,000...

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Existing Home Sales Up 5%

Existing-home sales for December 2011 increased 5% from November. This is the third consecutive month of increases and the second highest reading of 2011. The December level was also 3.6% above December 2010, and as a whole, existing-home sales were up 1.7% from 2010. Total housing inventory dropped 9.2% for December, representing a 6.2-month supply, down from a 7.2-month supply in November.Existing Home Sales is a measure of the selling rate of pre-owned single-family homes, collected by the National Association of Realtors from 650 realtor associations. It includes a geographical breakdown, as well as a measure of prices and house inventory,...

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Bank of America Suspends Cash-out Refinancing

For the second time in four months, Bank of America Home Loans have decided to suspend cash-out refinancing. The first time was in October when they suspended cash-out transactions insured by the Federal Housing Administration and the Veteran Administration. According to the U.S. Mortgage Market Index report for the week ended January 13th, inquiries for refinance loans have climbed 107 percent since the end of 2011. BofA's recent decision has come about because of this elevated volume of refinance activity. They say that cash-outs will continue to be on hold until this elevated activity recedes and until it is clear that overall processing...

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NAHB Housing Index Reaches 4 1/2 Year High

The National Association of Home Builders (NAHB) Housing Market Index (HMI) rises in January to a reading of 25. This is up 4 points from the previous December reading of 21 and marks the 4th consecutive month of increases. The last time the HMI had a reading of 25 or more was in June of 2007. Though moving in an encouraging direction, readings over 50 are considered positive, a level last reached in April of 2006.  The NAHB Housing Market Index is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the...

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The American People Place High Value on Homeownership

According to a recent nationwide survey of American voters, We The People really value homeownership. After all, it is the American dream to own your own house, complete with a yard and a white picket fence! So it's not surprising, then, that Americans are overall opposed to any government efforts to weaken or eliminate the mortgage interest deduction. People expect the feds to have a role in helping qualified home buyers obtain 30 year mortgages at affordable rates. If we want to maintain a somewhat thriving middle class economy, the government needs to realize how important homeownership really is to the American public. A good, healthy and...

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HARPs New Guidelines for Homeowners to Refinance

Good news for homeowners from the federal government! The Home Affordable Refinance Program (HARP) has recently changed its guidelines to allow homeowners to refinance at today's lower mortgage rates even if their homes have declined in value. Depending on the loan they choose, homeowners can now refinance without LTV limits. This will help them to improve cash flow to pay off their mortgages easier and, hopefully, not be hesitant to become a homebuyer again in the future. HARP works with primary residences, second homes and investment properties. HARP was established in 2009 to help homeowners with good payment history to refinance into more affordable mortgages despite declining home values. Originially, HARP capped LTVs at 125 percent for fixed rate loans, and 105 percent for adjustable...

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2011 Foreclosure Rate Down 34 Percent

We all know that housing foreclosures have been a big problem for Americans in the past few years. With the shaky economy and high unemployment rates, many people have had issues paying off their mortgages. In 2011, however, it looks as though Americans were given a bit of collective relief. Both the total U.S. foreclosure activity and the U.S. foreclosure rate were at their lowest annual level since 2007. That is good news. According to RealtyTrac's Year-End 2011 U.S. Foreclosure Market Report, there were nearly 2.7 milliion foreclosure filings in 2011. This includes default notices, scheduled auctions and bank repossessions. These were reported on nearly 1.9 million properties, which is actually a decrease of 34 percent in total properties compared to 2010. This means that approximately...

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CEO of Fannie Mae Resigning

The Chief Executive Officer of Fannie Mae, Michael J. Williams has just announced his departure from the Government Sponsored Enterprise (GSE). He first took on this role of CEO in 2009 when Fannie Mae was placed under the Federal Housing Finance Agency (FHFA).  Williams will remain in this position until the board of directors chooses a new CEO and director to take his place. “As CEO, I have focused the company on providing the necessary funding to support sustainable homeownership and quality affordable housing; creating the solutions needed to stabilize the market and help homeowners in distress; and building a strong new leadership team that can move the company and the industry forward,” said Williams. “For the past three years, we have executed on this important mission, while...

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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...

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New Freddie Mac Loan Forbearance Policy

As of February 1st, 2012, Freddie Mac will begin allowing unemployed borrowers an additional 6 months of forbearance on their mortgages. That's 6 months without prior approval from Freddie Mac, and an additional 6 months on top of that with prior approval.  So unemployed borrowers will now have up to 12 months to find jobs before they need to pay their loans. This direction comes straight from the Federal Housing Finance Agency (FHFA). "These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Tracy Mooney, SVP of single-family servicing and REO for Freddie Mac. "We believe this will put more families back on track to successful...

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Helping your Clients Understand the Loan Process

If you are looking for a way to simply break-down the mortgage application process to your clients, follow our other blog, 411 Rates. We provide a detailed but easy to follow explanation of all things mortgage related.  We hope that this resource will prove helpful to you! ...

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Current State of the Mortgage Banking Industry

As a Mortgage Professional yourself, you are likely aware of all the economic issues going on in our country. We at Quest Loans found this article to be informational. It discusses the state of the industry regarding the loan process, the new LO compensation reform, and more.  The following is an excerpt of the article written by Leif Boyd. "As we look at the current industry and where it will likely head over the next few years, many brokers have more questions than answers. Companies, brokers and loan officers are still figuring out how loan originator (LO) compensation reform will impact their balance sheets and wallets. As the government and banks have continued to add more requirements to get loans approved, it has become harder for once-qualified individuals to get loans. A few...

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Monthly Employment Report from the U.S. Labor Dept.

The U.S. Labor Department reported on Friday that the economy's payroll increased in December 2011. This monthly employment report showed that 200,000 jobs were created, well above the 150,000 that was expected. However, a portion of that number is most likely being attributed to seasonal hiring for the holiday shopping season. The Unemployment Rate fell from 8.7% in November to 8.5% in December. The rate has been falling for 4 straight months and is currently at its lowest level since February 2009. Even though the rate has been dropping, this economy still leaves 24.4 million Americans either unemployed or underemployed.   For more information, take a look at MSNBC's article...

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Protect Your Credit Score!!

Did you know that every time you receive a "pre-approved" or "pre-screened" credit offer in the mail that it is actually causing your credit score to go down? Every time they want to send you one of these offers, they have to run a credit check first to make sure that you are indeed pre-qualified and this causes your score to slowly drop. There is a great way to prevent that from happening so you can protect your credit score. You can choose to opt out of these offers. That means no more junk mail too! Once you sign up for this, they can no longer check your credit without verbal or written consent from you. This is a secure site made by the...

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FannieMae Desktop Underwriter Update Release Info!

On eFannieMae.com:   News   |   Learning Center   |   Selling Guide DU Version 8.3 March Update Release Notes AvailableDuring the weekend of March 17, 2012, Fannie Mae will update Desktop Underwriter® (DU®) Version 8.3 to implement enhancements to DU Refi PlusTM. The updates included in this release will apply to DU Version 8.3 loan casefiles submitted or resubmitted to DU on or after the weekend of March 17, 2012. View the Release Notes on the Desktop Underwriter page for details. eFannieMae.com  |  Privacy Policy  "With this release, modifications are...

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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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Tricks of the Trade

Hello Fellow Realtors and Loan Originators, Welcome to Mortgage Jive! This is the place to gather together and share tips and information regarding mortgages, loans and the real estate market in general. I will be posting the latest news from the industry here. Please feel free to contribute anything you have come across that would benefit everyone. The goal is to increase our knowledge to stimulate our businesses so that we are fully equipped to do our jobs and help home buyers with all their needs. This is all about connecting, networking and thriving in this economy! Bookmark the page and visit back often! Thank you...

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