Tuesday, June 30, 2015

Average US Rate on 30-Year Mortgage Edges up to 4.02 Pct.

Average long-term U.S. mortgage rates were mixed last week, marking slight increases or declines but remaining close to high levels for the year.

Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage edged up to 4.02 percent this week from 4 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.21 percent from 3.23 percent.

Mortgage rates have increased in recent weeks, in the midst of the spring home buying season, as the economy has shown signs of improvement.

Government data issued showed that purchases of new U.S. homes surged in the Northeast and West last month, as steady job growth over the past year has lifted the housing market. Sales of new homes have soared 24 percent year-to-date and are on pace for their best year since 2007. They've been bolstered by the additional incomes from employers hiring 3.1 million workers in the past 12 months and mortgage rates that remain low by historical standards despite their recent increase.

A year ago, the average 30-year rate was 4.14 percent; the 15-year was slightly above its current level, at 3.22 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.7 point. The fee for a 15-year loan rose to 0.6 point from 0.5 point.

The average rate on five-year adjustable-rate mortgages fell to 2.98 percent from 3 percent; the fee remained at 0.4 point. The average rate on one-year ARMs declined to 2.50 percent from 2.53 percent; the fee rose to 0.3 point from 0.2 point.

read more: http://www.edgeboston.com/business/corporate/news/179960/average_us_rate_on_30-year_mortgage_edges_up_to_402_pct

Friday, June 26, 2015

Strong housing data pushes 30-year fixed mortgage rate higher

Economists have been declaring for years that mortgage rates were going to rise. Now those predictions seem to be coming true.

As the Federal Reserve contemplates raising its benchmark federal funds rate, home loans are becoming more expensive. Indications are that the days of the 30-year fixed-rate home loan at a rate below 4 percent are gone, if not for good, certainly for a long time.

For the third week in a row, the 30-year fixed-rate average remained above the 4 percent mark, according to the latest data released Thursday by Freddie Mac. It rose to 4.02 percent with an average 0.7 point this week. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The 30-year fixed rate was 4 percent a week ago and 4.14 percent a year ago.

Although rates are rising, they remain near their all-time lows. The 30-year fixed-rate average hasn’t been above 5 percent since February 2011, and it hasn’t topped 6 percent since November 2008.

The 15-year fixed-rate average dropped to 3.21 percent with an average 0.6 point. It was 3.23 percent a week ago and 3.22 percent a year ago.

Hybrid adjustable rate mortgages also fell. The five-year ARM average edged down to 2.98 percent with an average 0.4 point. It was 3 percent a week ago and 2.98 percent a year ago.

The one-year ARM average slipped to 2.5 percent with an average 0.3 point. It was 2.53 percent a week ago.

see more at: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/06/25/strong-housing-data-pushes-30-year-fixed-mortgage-rate-higher/

Tuesday, June 23, 2015

70% of Greek mortgages aren't being paid

The economy in Greece is so bad that Greeks have stopped paying their personal and consumer debts and are raising cash by selling family heirlooms, according to an astonishing article in the Financial Times.

Here is the scariest quote:

“There’s a real issue of moral hazard  . . .  Around 70 per cent of restructured mortgage loans aren’t being serviced because people think foreclosures will only be applied to big villa owners,” one banker said.

Greece has become an upside-down world where no one feels ashamed about not paying their debts, the FT reports, because no one can pay their debts:

The family still owes a year’s worth of school fees at the private international school their daughter attended, which George admits is not a priority. He is no longer embarrassed by his inability to pay, he says, because so many other parents are in the same situation.

At the same time, consumers are pulling all their cash out of the Greek banks, for fear they will fail. Greece needs to make a €1.5 billion payment to the IMF by the end of June.

Read more: http://www.businessinsider.com/70-of-greek-mortgages-arent-being-paid-2015-6

Saturday, June 20, 2015

The foreclosure crisis would have happened even without risky mortgages

 Finally, it seems, the mainstream press is beginning to get it right.

Too bad it only took the better part of a decade.

Fortune published this gem on recent research that suggests the foreclosure crisis would have happened even without risky mortgages.

Chris Matthews’ balanced look at a working paper by Wharton economists Fernando Ferreira and Joseph Gyourko, finds that prime mortgage foreclosed at a greater pace than subprime from 1997 to 2012.

 The authors note: "The private label subprime mortgage-backed securities market did not really boom until late in the last housing cycle, so these data do not become nationally representative until the middle of the last decade."

However, by the time the bubble burst, the press found itself drawn, wrongly so, to the exciting, explosive "subprime" nomenclature.

In an interview with Matthews, Ferreira states that even putting 20% down for a mortgage won’t protect against widespread defaults when economic bubbles burst.

Here’s Matthews’ expert takeaway:

    We can draw two conclusions from this data. One is that your chances of being foreclosed upon in the past decade was more a matter of timing than anything else. If you were a subprime borrower in, for instance 2002, who bought a bigger house than a more prudent and creditworthy borrower would have bought, chances are you would have been fine. But a prime borrower who did everything right—bought a house he could easily afford, with a large downpayment—but did so in 2006 would have had a higher chance of defaulting than the subprime borrower with better timing.

read more: http://www.housingwire.com/blogs/1-rewired/post/34244-the-foreclosure-crisis-would-have-happened-even-without-risky-mortgages

Tuesday, June 16, 2015

What you should know before taking out a reverse mortgage

If you took out a reverse mortgage without adding your spouse to the documents, do you know what could happen with the property after you die?

Did you know you could lose the house if you forgo maintenance or get behind on property taxes?

Are you under the impression the mortgage is with the government?

Reverse mortgages, which typically pay homeowners 62 and older a portion of their home equity until the borrower dies or moves, are complex products with provisions that occasionally are a moving target.

    Reverse mortgage advertisements are definitely downplaying the requirements and risks involved. These ads create confusion among senior citizens who are in dire need of additional funds. I've read from revmortgage several reverse mortgage guidelines that can help borrowers understand the...

So it's little surprise that when the Consumer Financial Protection Bureau recently showed consumer ads about the products to about 60 seniors who had very little knowledge about them, the homeowners had trouble even understanding that the products were loans that have to be repaid.

"As older consumers consider reverse mortgage loans to tap into their home equity, they need to be careful of those late-night TV ads that seem too good to be true," CFPB Director Richard Cordray said in issuing a consumer alert about the products. "It is important that advertisements do not downplay the terms and risks of reverse mortgages or confuse prospective borrowers."

CFPB officials stopped short of claiming any of the 97 ads met the regulatory definition of deceptive marketing practices, and a trade group representing reverse mortgage lenders said it has filed a freedom of information act to review the ads used in the focus groups.

But the false impressions created by the print, TV and web ads pointed out some useful tips for seniors who are starting to research whether such a product is right for them, and recent changes to some of the terms affecting holders of reverse mortgage holders are worth noting.

These are not government loans. While lenders offering federally insured reverse mortgages must comply with certain rules, the loans themselves are not taken out directly with the government.

Read the fine print. Homeowners applying for a federally insured home equity conversion mortgage (HECM) are required to undergo counseling about the terms. Make sure you understand them before signing, including the fact that you could face foreclosure if you fail to maintain the property or pay property taxes. The CFPB said few ads mentioned interest rates or repayment terms.

see more: http://www.chicagotribune.com/business/yourmoney/sc-cons-0618-journey-20150615-column.html

Friday, June 12, 2015

Borrowers Underwater on Their Mortgages Decline

Home-price gains are pulling more mortgage borrowers above water, but the problem of borrowers owing more on their homes than they are worth could persist in some markets for years to come.

At the end of the first quarter, 15.4% of homeowners with a mortgage—or about 7.9 million—had mortgage balances that surpassed their homes’ value, according to real-estate information company Zillow Group Inc., down from 16.9% in the fourth quarter of last year.

But 4 million of the underwater borrowers owed at least 20% more than their homes were worth, Zillow said, leaving them little reason for cheer even as the housing market heats up around them.

The negative-equity problems could lead to higher foreclosure rates in hard-hit markets while also limiting the supply of homes for sale, said Zillow chief economist Stan Humphries.

“It’s clear that it’s going to be a long-term problem in the housing market, not a short-term problem we can quickly get past,” said Mr. Humphries.

Negative equity was especially prevalent on homes with lower values and in markets hardest hit by the financial crisis, Zillow said.

More than a quarter of owners with a mortgage on the least-valuable third of homes were underwater, Zillow said, compared with 8% in the most valuable third of homes. Housing markets with the highest levels of negative equity included Atlanta, Chicago and Las Vegas.

In Phoenix, where 19% of mortgaged homes in the first quarter were underwater, tight inventory at the lowest price points is frustrating many buyers, said Michael Orr, director of Center for Real Estate Theory and Practice at the W.P. Carey School of Business at Arizona State University. He said for-sale homes priced below $200,000 are typically getting many offers.

The number of active listings overall in Phoenix fell 19% between May 1, 2014, and May 1 this year, Mr. Orr said, while median prices rose to $215,000 from $204,500.

“It’s quite a significant part of the reason that we’ve got low supply,” Mr. Orr said. “Some of them are not in financial difficulty but can’t sell. They would rather just sit on it and hope that at some point prices go back up.”

see more: http://www.wsj.com/articles/borrowers-underwater-on-their-mortgages-decline-1434081661

Tuesday, June 9, 2015

Reverse mortgages worth a look, if approached with caution

LOS ANGELES - Even as regulators are firing shots at reverse mortgages for what they consider deceptive advertising, financial planners are taking a new look at these loans as a way to avoid selling stocks.

New research suggests the products may actually be worth a look if one can tune out the possibly shady sales tactics.

Reverse mortgages allow homeowners aged 62 and above to borrow against their home equity, and to receive either a lump sum, a series of monthly checks or a line of credit that can be tapped as needed. The debt does not have to be repaid until the borrower leaves the home by selling it, moving out or dying.

Philadelphia has proved a popular place for reverse mortgages, ranking at the top for the number of such mortgages awarded since 2011, according to an analysis of Federal Housing Administration data for The Associated Press by Reverse Market Insight, a California-based company. The city, where many families have lived in the same close-knit neighborhoods for decades, was followed by Los Angeles, Washington and Chicago in 2014.

The Consumer Financial Protection Bureau slammed industry advertising earlier this week, saying it misled people about the risks and costs of such loans. Older homeowners in the bureau's focus groups "were generally confused" by the ads, director Richard Cordray told a news conference.

The ads gave people the impression that a reverse mortgage is "a risk-free government benefit" rather than a loan with fees and compounding interest that increases the balances owed over time, he said. Reverse mortgages typically are insured by the federal government but are made and serviced by for-profit private lenders.

Cordray also took aim at ads that feature celebrity endorsers such as Henry Winkler, Robert Wagner and former U.S. Senator Fred Thompson, without mentioning them by name.

"These well-known actors, even a former senator, add a false air of credibility to the products," Cordray said.

read more: http://www.phillyvoice.com/reverse-mortgages-worth-look-if-approached-caution/

Wednesday, June 3, 2015

Bank of America wins Supreme Court ruling on ‘underwater’ home mortgage

WASHINGTON — The U.S. Supreme Court on Monday handed a win to Bank of America Corp by ruling that a second mortgage on an “underwater” home - one with a mortgage balance exceeding its current value - cannot by voided during bankruptcy.

On a unanimous vote, the court ruled against two homeowners, David Caulkett and Edelmiro Toledo-Cardona, in Florida, where many homeowners have struggled to pay their mortgages following the recent housing crisis.

Caulkett and Toledo-Cardona had both won before the regional appeals court that oversees Florida. The 11th U.S. Circuit Court of Appeals had ruled that homeowners in Chapter 7 bankruptcy can void - or in bankruptcy terms “strip off” - a second mortgage when the debt owed to the holder of the first mortgage is more than the property’s current value.

That means the lender loses its ability to foreclose on the property even if its value increases.

But Bank of America, which is the second mortgage holder in both cases, argued in court papers that the approach taken by the 11th Circuit was different than other appeals courts around the country.

source: http://www.reviewjournal.com/news/nation-and-world/bank-america-wins-supreme-court-ruling-underwater-home-mortgage

Monday, June 1, 2015

Solar Savings For Veterans With VA Energy Efficient Mortgages

Memorial Day reminds Americans of the millions who have served in uniform over the years. Almost everyone knows a soldier, past or present. Education, health care, home loans, and other benefits accrue as each military employee serves out his or her term. But did you know that military service also offers every vet enhanced real estate value with home solar credit for improvements that boost energy efficiency and save a lot of money?

You’ve heard Cost of Solar reveal the many benefits of rooftop solar systems. The US Department of Veterans Affairs has yet another one here. Veterans can qualify for a lot more than the cost of their homes from the Energy Efficient Mortgage provisions built into the government’s Energy Star program.

From the website: “An Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans, thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.”

To obtain home solar credit through an EEM, the VA borrower hires a home energy rater to assess the property’s current energy efficiency. If you’re a veteran and considering buying a home, ask your lender about the VA’s energy-efficient mortgages.

Here are a few ways veterans and their families can profit from bundling home solar credit via an energy efficiency loan with their traditional mortgage.

Improve your building’s energy performance. Your energy-efficient mortgage can use a number of power-saving technologies to improve your home’s energy efficiency. These include making your heating, cooling, ventilation, and other systems work to their highest design specifications in terms of speed and efficiency.

Reduce monthly utility bills. Some homeowners who install solar panels actually cut their monthly utility bills in half! They save thousands of dollars annually and quickly pay back the renewable investment. Creative financing is now available so that homeowners can either lease a solar system (under a variety of plans) or purchase it to save money in the long run. Many utilities offer ways to sell back the extra power you generate to the grid. Although these options vary company-by-company and from state to state, they are becoming more common as people begin to realize the hidden costs of fossil fuels and nuclear power.

see more: https://cleantechnica.com/2015/05/28/solar-savings-for-veterans-with-va-energy-efficient-mortgages/