Mortgage rates fall for 5th straight week

WOW!  So if you can afford it, I think we should all start jumping into the real estate market!

USA TODAY article

By ALAN ZIBEL, AP Business Writer

WASHINGTON – Mortgage rates fell sharply Monday, as investors reacted to the government’s takeover of Fannie Mae and Freddie Mac. And that’s exactly what homeowners like Jim Chereskin had been waiting for.

Chereskin, who lives in Naperville, Ill., took out an adjustable-rate loan in 2003 and has been worrying about how much his mortgage payments will rise once the loan resets to market rates in about 18 months.

“I don’t want to have to worry about it anymore,” said Chereskin, who expects to switch to a fixed-rate loan as soon as this week. That way, he said, “I can sleep at night and I’m good.”

The government’s takeover of Fannie Mae and Freddie Mac — mortgage titans that own or guarantee about half of all U.S. mortgages — will help borrowers who had been nervously waiting for the best time to get out of the adjustable-rate mortgages they took out during the housing boom.

But it will do little to stem the dramatic rise in foreclosures. And so far, the government’s other programs to assist distressed borrowers in refinancing have had minimal impact. And that has consumer advocates calling on Fannie and Freddie to do more.

The average interest rate for a 30-year fixed rate mortgage dropped 0.3 of a percentage point to 6.04 on Monday, according to HSH Associates, and are expected to decline a little more in the coming weeks.

Paul Lueken, president of 1st Advantage Mortgage in Lombard, Ill., received an influx of calls Monday morning from Chereskin and other consumers who were wondering how the government’s actions would affect mortgage rates. Lueken’s message to those borrowers: Pay attention, because rates are “starting to move in your direction.”

While it’s nothing like the refinancing boom several years ago, Monday brought a rare moment of optimism in what has been an excruciating year for mortgage lenders, mortgage brokers, real estate agents and homebuilders.

“It’s going to restore confidence…with a lot of homebuyers that are right now sitting on the fence,” said Jim Gillespie, chief executive of Coldwell Banker Real Estate.

The government’s actions “should make it easier for home buyers to find and qualify for a mortgage,” said Timothy Eller, chief executive of homebuilder Centex Corp.

Mortgage bankers and brokers also are hoping the government will eliminate or reduce fees that the Fannie and Freddie have been charging lenders to protect against increased losses from mortgages they own or guarantee.

Those rising fees have frustrated many in the industry because they are squeezing out some borrowers. Lenders typically pass them along through higher mortgage rates or higher upfront costs.

Still, it remains to be seen whether Fannie and Freddie — under government control — will be able to do more to prevent foreclosures.

The companies already have increased payments to loan servicers — companies that collect mortgage payments on behalf of Fannie, Freddie and other lenders — to encourage them to help more borrowers work out their loan problems and avoid foreclosure.

John Courson, chief operating officer of the Mortgage Bankers Association, said that new leadership at Fannie and Freddie will provide an opportunity to review foreclosure-prevention practices. “Are there ideas that we can come up with that might be better and more effective?” he asked.

Consumer groups were already urging the government to place more pressure on Fannie and Freddie to aid borrowers in trouble.

“Since we are using tens of billions of dollars to bail out entities engaged in these lending practices, it’s time for the nation to demand those same entities fix it by restructuring loans and avoiding the further demise of the housing market,” said Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, a Boston-based group that helps troubled borrowers.

On Wall Street, though there are fears that lawmakers and advocacy groups will push Fannie and Freddie into more financial troubles by being too lenient on borrowers facing foreclosures.

“Now you have people who are running the companies who interests are not aligned with the shareholders, but are politically aligned,” said Doug Dachille, chief executive of investment firm First Principles Capital Management in New York.

More legislation to help borrowers avoid foreclosure appears unlikely until next year at the earliest.

President Bush earlier this summer signed a bill that aims to prevent foreclosures by allowing an estimated 400,000 homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan.

The Bush administration also has expanded guidelines for the Federal Housing Administration, which backs loans to borrowers with poor credit and small down payments. But that program has helped only a tiny number of borrowers who are actually behind on their mortgages.

Of the 356,000 borrowers projected to use the government’s refinance program through the year ending Sept. 30. — about 1.5 percent, or about 5,000 consumers, are likely to have been delinquent. The Bush administration says borrowers are taking advantage of the program before they fall into delinquency and notes that the program was expanded over the summer to allow more delinquent borrowers to qualify.

30-year loans climb a quarter point over the previous week…

Associated Press
Sunday, June 15, 2008

Rates on 30-year mortgages jumped to the highest level in nearly eight months, reflecting increased concerns about what the Federal Reserve might do to battle inflation.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent last week. That was up sharply from 6.09 percent the previous week.

It was the highest level for 30-year mortgages since they averaged 6.33 percent for the week of Oct. 25.

Analysts attributed the big jump to increased concerns in financial markets that the Federal Reserve might be preparing to start raising interest rates in order to make sure that inflation does not get out of control.

In a speech on Monday, Federal Reserve Chairman Ben Bernanke signaled deepening worries about inflation and said the Fed would “strongly resist” any tendency for Americans’ expectations about price increases to become unsettled.

Those comments have led many investors to move up the date when they believe the Fed might start raising interest rates to sometime later this year. From last September through April, the central bank was aggressively cutting rates to try to keep the economy from falling into a recession.

Other types of mortgages showed increases this week, according to the Freddie Mac survey. Rates on 15-year fixed-rate mortgages rose to 5.93 percent from 5.65 percent; five-year adjustable-rate mortgages rose to 5.70 percent from 5.51 percent last week, and one-year adjustable-rate mortgages edged up to 5.09 percent from 5.06 percent.

The mortgage rates do not include points. The nationwide fee for 30-year and five-year mortgages averaged 0.7 of a point. The fee on 15-year and one-year mortgages averaged 0.6 of a point.

A year ago, rates on 30-year mortgages stood at 6.33 percent, 15-year mortgage rates averaged 5.99 percent, five-year adjustable-rate mortgages were at 6.37 percent and one-year adjustable-rate mortgages were at 5.75 percent.

By ALAN ZIBEL, AP Business Writer
Friday, June 13, 2008

Soaring foreclosures are continuing to raise questions about the mortgage industry’s claims that they are making a dent in the housing crisis.

Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.

The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren’t keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

“It’s clear that these voluntary efforts in and of themselves cannot really make a dent,” said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. “Government intervention is going to be necessary.”

Mark Zandi, chief economist of Moody’s Economy.com who also serves as an adviser to Republican John McCain’s presidential campaign wrote earlier this week that “the Bush administration’s efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.”

A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 percent of all U.S. homes.

Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.

A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup Inc., foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding “significant limitations” with data collected by trade groups like Hope Now.

“Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness,” Dugan said. “They were typically responses to surveys that produced aggregate, unverified results from individual firms.”

The comptroller’s report found that 2.7 percent of seriously delinquent mortgages had been modified as of March, up from 1.8 percent in November 2007.

The industry has continued to favor repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.

Rep. Barney Frank, D-Mass., said this week that Dugan’ analysis shows that “much more aggressive action is needed.”

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can’t find buyers or owe more than their home is worth and can’t get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

According to the RealtyTrac report, one in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

Rick Sharga, RealtyTrac’s vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. “I don’t think we’ve seen the high point,” he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody’s Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that’s a positive for the real estate market, buyers in other parts of the country are still holding back.

“I think a lot of people are waiting to see if we really have hit the bottom,” Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be “feeble.” Home prices, she wrote, are still expected to fall another 10 percent by the end of 2009.

Associated Press – Sunday, May 25, 2008

Rates on 30-year mortgages dipped below 6 percent last week, falling to their lowest level in five weeks.

Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 5.98 percent last week. That was down from 6.01 percent the previous week.

It was the lowest level for 30-year mortgages since they averaged 5.88 percent the week of April 17.

After that, 30-year rates climbed above 6 percent for four straight weeks.

Rates on 15-year fixed-rate mortgages also fell, dropping to 5.55 percent, down from 5.6 percent the previous week. However, rates on one-year and five-year adjustable-rate mortgages rose for the week.

The five-year adjustable-rate mortgage edged up to 5.61 percent from 5.57 percent the previous week. The rate on one-year ARMs rose to 5.24 percent, up from 5.18 percent the previous week.

The mortgage rates do not include points. The nationwide average fee for 30-year fixed-rate mortgages was 0.5 of a point.