Mortgage Rates Officially Hit New All-Time Lows!
Mortgage Rates hit new all-time lows today. In most cases, lenders' offerings are just slightly better across the board than they were in late January, the last time we officially noted "new all-time lows," though some lenders are not quite back to their previous best levels. A much weaker-than-expected reading on a widely followed report on business conditions in the mid-Atlantic region gave rates markets a bit of an early jolt lower. From there, an absence of additional data gave way to technical momentum, helping rates even lower.
Markets are facing tremendous uncertainty over the eventual outcome of Greek elections in June as well as the fate of the Spanish banking sector. Today, Spain saw their own version of the "run on banks" that occurred in Greece yesterday, reminding traders that, even if Greece makes it out of this mess still in the Euro-zone, that there are bigger fish to fry.
All that uncertainty has investors piling into safe-haven assets. In a global economy where a currency as massive as the Euro is in serious trouble due to problems in one small Euro-zone country, investors are just looking for a safe place to park their assets. US Treasuries have been one such place and their recent rally benefits other products in that same medicine cabinet, such as MBS (the "mortgage backed securities" that most directly influence rates).
Apart from Europe, there's also the consideration of Fed policy in the US. Whether or not the Fed extends recent quantitative easing measures or embarks on new ones is a matter of great concern to bond markets. At the last policy announcement, the door was left open for additional easing as-needed, and yesterday's "minutes" from that policy meeting essentially confirmed that open door. Markets perceive that "as needed" bit as becoming more and more "needed" if the Fed sees signs in the domestic economy like the one seen this morning's weak data. So when investors think the Fed is more likely to buy more fixed-income investments, rates stay low or move lower, all other things being equal.
Any way you account for the causes, the bottom line is that mortgage rates are lower. We'd probably say that 3.75% is the new Best-Execution for 30yr Fixed loans over the past few days and really cemented that today. Keep in mind, of course, that while we generally think Europe will continue to weigh on markets, keeping rates fairly contained in this new, low range, that "cement" can always be broken if sufficient force is applied. We're fond of mentioning the increasing barriers to improvement at current levels. We don't think rates can't improve, just that it will be slow going, and with risks of periodic bounces back.
Loan Originator Perspective With Rates At All Time Lows
Alan Craft, Loan Officer at Integrity Home Loan of Central Florida
These are the best rates we have ever seen. No reason not lock and take advantage. Is it possible they could go lower? Yes it is possible, but I feel there is a much better chance of worse than better.
Ted Rood, Senior Mortgage Consultant, Wintrust
The biggest drawback to falling rates (as we've seen for a while now) is that borrowers can be lulled into a false sense of security. It doesn't do a borrower any good to stay at a high rate with the hope of getting a new rate 1/4% better than has ever been available. In the equities market, trying to time stock prices to buy at the absolute lowest price is called "catching a falling knife", and it applies to mortgages as well. If you're at a high rate now, and can profit from a refi today, waiting costs you money since you're continuing to pay a higher rate than necessary. In my experience, catching falling knives is not a fun thing to do!
Mike Owens, Partner with HorizonFinancial, Inc.
I've always been a lock it and play it safe originator, but right now I'm 50/50. Rates just keep edging down and I'm actually going to floating short term just to see what plays out. The lock trigger is ready in case, but floating seems safe for now.
Matt Hodges Loan Officer, Presidential Mortgage Group
The mortgage market is really intriguing right now. Rates have been in slow decline over several weeks, yet there's a persistent fear of a spike upwards with any positive news. Meanwhile, we keep wondering "Where/when will 3.5% or lower be readily available for clients with 0 points?" Volatility and volume have limited the improvements. For the time being, at 30 days or less to closing, lock bias is firmly in place.
Jason York, Vice President of VA Operations at Prime Mortgage Lending, Inc
With where we currently are, I am locking loans that I would typically continue to float.
Kent Mikkola, Mortgage Consultant , M & M Mortgage, LLC #213677
Improving rate environments tend to lull us into a false sense of security and often 1 day can wipe out the gains that were made over several weeks. As they say, "a bird in the hand..."
Jeff Statz Mortgage Advisor, Network Funding, L.P.
Locking most now...stay vigilant for pricing to hold for FHA 6/11 Streamline changes
FHA: No Collections Greater Than $1000 Allowed After July 1
The Federal Housing Administration (FHA) will implement a few rule changes to its methods of approving loans on July 1.
Initially set to begin this past April, the most significant rule change to be implemented by the FHA is the prohibiting of borrowers with more than $1,000 in disputed collection accounts from obtaining an FHA mortgage.
While the new rule may certainly restrict many potential homebuyers, the FHA is attempting to limit there number of default loans, most of which were from borrowers who had a significant amount of debt on their credit profile prior to securing an FHA mortgage.
In light of the pending rule change, potential home buyers should continue to monitor their credit reports closely and address any delinquent payment or miscalculated errors to avoid any setbacks. Despite the new rule change, an FHA mortgage remains to be an easy way for potential homebuyers to secure a home, as it provides low down payment costs at roughly 3.5 percent, and less prohibitive restrictions regarding ones credit history.
New FHA Refinance Starting in June. Lowered Mortgage Insurance Premiums.
Date: March 6, 2012
To: All Approved Mortgagees
Mortgagee Letter 12-4
Subject Single Family Mortgage Insurance: Annual and Up-Front Mortgage
Insurance Premium – Changes
Purpose This Mortgagee Letter (ML) announces changes to the FHA Single
Family Annual Mortgage Insurance Premium (Annual MIP) and Up-
Front Mortgage Insurance Premium (UFMIP). Changes are applicable
to all Single Family (SF) Forward Mortgage programs except those
noted in the section below titled, “Exceptions to Announced Premium
Changes”. Current Annual MIP and UFMIP remain unchanged for those
excepted programs and products at this time.
Effective Date These changes are effective for FHA case numbers assigned on or
after April 9, 2012, unless otherwise specified below.
Mortgagees must continue to comply with the requirements of
ML 2011-10 concerning requests for, and cancellation of, FHA case
numbers. Specifically, mortgagees must:
request case numbers only when they have an active loan application
for the subject borrower and property; and
certify at the time of requesting a case number that they have an
active loan application for the subject borrower and property; and
provide the subject borrower’s name and social security number for
all new construction (proposed construction and existing
construction less than one year old).
Continued on next page
2
Mortgagee Letter 12-4, Continued
Affected Topics
Below is a list of the blocks in the subject handbook that are affected.
HUD 4155.2 Lender’s Guide to Single Family Mortgage Insurance Process
7.3.e, Reference Chart: UFMIP and Annual MIP for Mortgages with Terms More Than 15 Years
7.3.f, Annual Premiums for Mortgages with Terms More Than 15 Years
7.3.g, Reference Chart: UFMIP and Annual Premiums for Mortgages with Terms Less Than 15 Years
Increase to Annual Mortgage Insurance Premium
On December 23, 2011, the President signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (Public Law 112-78), which requires FHA to increase the Annual MIP it collects by 10 basis points (bps). This change is effective for case numbers assigned on or after April 9, 2012.
The table below shows the new effective annual premium rates by amortization term, base loan amount and LTV ratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date.
Term > 15 Years
Base Loan Amount
LTV
Effective
Annual MIP
Any Amount
≤ 95.00%
April 9, 2012
120 bps
Any Amount
> 95.00%
April 9, 2012
125 bps Term ≤ 15 Years with LTV above 78%
Any Amount
≤ 90.00%
April 9, 2012
35 bps
Any Amount
> 90.00%
April 9, 2012
60 bps
Note: SF forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).
Continued on next page
3
Mortgagee Letter 12-4, Continued
Increase to Annual Mortgage Insurance Premium on Mortgages with a High Outstanding Base Loan Amount
FHA is also exercising its pre-existing statutory authority to add an additional 25 bps to mortgages with base loan amounts exceeding $625,500. This change is effective for case numbers assigned on or after June 11, 2012.
The table below shows the new effective annual premium rates by amortization term, base loan amount and LTV ratio. It also shows when the new Annual MIP takes effect, based on FHA Case Number assignment date.
Term > 15 Years
Base Loan Amount
LTV
Effective
Annual MIP
≤ $625,500
≤ 95.00%
June 11, 2012
120 bps
≤ $625,500
> 95.00%
June 11, 2012
125 bps
Above $625,500
≤ 95.00%
June 11, 2012
145 bps
Above $625,500
> 95.00%
June 11, 2012
150 bps Term ≤ 15 Years with LTV above 78%
≤ $625,500
≤ 90.00%
June 11, 2012
35 bps
≤ $625,500
> 90.00%
June 11, 2012
60 bps
Above $625,500
≤ 90.00%
June 11, 2012
60 bps
Above $625,500
> 90.00%
June 11, 2012
85 bps
Note: SF forward mortgages with amortization terms of 15 years or less, and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt from the Annual MIP (see Mortgagee Letter 2011-35).
Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions
For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after
June 11, 2012.
Continued on next page
4
Mortgagee Letter 12-4, Continued
Increase to
Up-Front Mortgage Insurance Premium
The UFMIP for affected SF forward mortgages will be increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage and will continue to calculate actual premium charges against the base loan amount before adding any financed UFMIP. This change is effective for case numbers assigned on or after April 9, 2012.
Decrease to
Up-Front Mortgage Insurance Premium on Certain Streamline Refinance Transactions
For all SF Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before
May 31, 2009, the UFMIP will decrease from 1 percent to 0.01 percent of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.
Exceptions to Announced Premium Changes
The changes specified in this ML apply to all mortgages insured under FHA’s Single Family Mortgage Insurance Programs except:
Title I
Home Equity Conversion Mortgages (HECM)
Section 247 (Hawaiian Homelands)
Section 248 (Indian Reservations)
Section 223(e) (Declining Neighborhoods)
Continued on next page
5
Mortgagee Letter 12-4, Continued
Please address any questions about the topics in this Mortgagee Letter to the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number via TTY by calling the Federal Information Relay Service at 1-800-877-3339.
Signature
__________________________________
Carol J. Galante
Acting Assistant Secretary for Housing – Federal Housing Comm
March report from the Federal Housing Administration (FHA)
People are realizing the opportunity provided through an FHA financed mortgage loan. A March report from the Federal Housing Administration (FHA) has indicated, there has been a 60 percent increase in FHA purchase applications and a 10 percent increase in FHA refinance applications.
Simple FHA loan applications have also increased nearly 30 percent over the last month, with nearly 210,000 applicants seeking an FHA financed loan. Even more exciting, the amount of completed applications grew by nearly 12 percent over the same time.
The benefits of FHA financing continue to prove significant over other financing options. With lower credit score requirements, and the allowance of a minimal down payment, an FHA loan continues to be a wise choice for potential homebuyers or those seeking refinancing.
March report from the Federal Housing Administration (FHA)
People are realizing the opportunity provided through an FHA financed mortgage loan. A March report from the Federal Housing Administration (FHA) has indicated, there has been a 60 percent increase in FHA purchase applications and a 10 percent increase in FHA refinance applications.
Simple FHA loan applications have also increased nearly 30 percent over the last month, with nearly 210,000 applicants seeking an FHA financed loan. Even more exciting, the amount of completed applications grew by nearly 12 percent over the same time.
The benefits of FHA financing continue to prove significant over other financing options. With lower credit score requirements, and the allowance of a minimal down payment, an FHA loan continues to be a wise choice for potential homebuyers or those seeking refinancing.
FHA First Time Buyers
Beginning the process of purchasing a home can be a bit confusing for many first-time home buyers. With so many different financing options available, and opinions varied amongst one professional financer to another, things can become overwhelming.
Some first-time home buyers may view obtaining an FHA mortgage as too much work in comparison to other avenues. However, this is not the case. Acquiring an FHA mortgage has proven to be easier. With an experienced professional to guide you along the way, the process of obtaining an FHA financed mortgage is actually not difficult at all.
FHA mortgages also provide opportunities to borrowers with low credit scores that other mortgage providers won’t. Additionally an FHA mortgage allows for a down payment as low as 3.5 percent, where as other providers require a 20 percent down payment. While FHA mortgages require properties to be up to code and safe to live in, this should not be viewed as a problem, rather a guarantee that you will be satisfied with your new home the moment you move in. FHA mortgage rates are competitive as well, with rates for a 30-year fixed mortgage as low as 3.25 percent.
With lower mortgage rates, low credit restrictions, and the assurance of moving into a quality home, an FHA mortgage is a simple, reliable path towards acquiring home ownership.
The U.S. Housing Market: Are Happy Days Really Here Again?
|
Ranieri: Housing Has Bottomed but Credit Issues Loom.
By Al Yoon
- Bloomberg News
- Lewis Ranieri, a widely followed investor, shown here in 2011.
The U.S. housing market has bottomed but a lack of credit and pending regulation have kept both consumers and lenders from increasing activity in a meaningful way, Lewis Ranieri, a widely followed investor and pioneer of the mortgage-backed securities market, said at a conference Monday.
Mr. Ranieri, who runs a variety of mortgage businesses that cover loan servicing, distressed investments and new originations, said his firm is taking advantage of the current market conditions with loan purchases. Loan buyers run the risk that home prices continue to fall, harming returns should the assets be sold.
“Many, myself included, think we are at the bottom,” Mr. Ranieri said at a conference of the Mortgage Bankers Association in New York. From the perspective of his firms, “we can’t buy loans fast enough,” he said.
However, he added, the flow of credit for home purchase is very constrained. It’s difficult for people with credit scores below 740 to get a loan. “That’s about half the population,” he said.
Uncertainty of how regulators will define a new set of lending standards in coming months has stunted the recovery, Mr. Ranieri said. Lenders and investors need clarity on the rules that they will be asked to meet, he said.
New rules that will define a “qualified mortgage” are intended to protect consumers from the kind of risky loans that sparked the housing bust and ensuing financial crisis. Lending standards have tightened dramatically since the housing market turned south, and lobbying groups including the MBA are concerned that the rules developed by the Consumer Financial Protection Bureau could make lenders even more cautious.
“I truly believe the future of our industry is decided in the next eight months,” Mr. Ranieri said. There’s a regulatory movement–as well intended as it may be–not only trying to fix [the market], it’s trying to change it.”
FHA April 1 Changes: $1000 Collections Rule Reversed
The Federal Housing Administration (FHA) previously had plans to implement a new rule requiring those with $1,000 or more in disputed or unpaid collections account to pay them off or make three months worth of payments before they can qualify for an FHA loan.
The planned rule, which was set to be implemented on April 1, was heavily criticized by lenders, citing that it would significantly decrease those that could qualify for an FHA loan. Some reports estimated that as much as 10 percent of borrowers could be denied an FHA loan because of the restrictions applied.
In the face of scrutiny and under the realization that the unemployment rate remains high, the FHA has decided to postpone its implementation of its new rule until July.
Potential homebuyers continue to benefit from historical low costs and with the delay of the imposing FHA restrictions, many can still benefit from a beneficial mortgage loan with as little as 3 percent down payment.
Veterans and Military Home Loan Financing in Illinois
Veterans and Military Home Loan Financing in Illinois
Created to honor those who safeguard our freedom, Welcome HeroHOmes is open to all qualified Illinois veterans, active military personnel, reservists and Illinois National Guard members.
Gil Kerbshian's homebuyer financing package includes:
- a $10,000 forgiveable loan over two years for down payment and closing cost assistance
- a 30-year fixed rate mortgage that has an affordable interest rate
- an optional mortgage credit certificate to reduce federal income tax liability.
Eligibility
Flyer: www.realestateloans.com/herohomes.pdf
Gil Kerbashian can be reached at 847-873-7295
Why Democrats and Republicans Have Failed America on Housing
but..
The Focus Should be on Increasing Home Sales and Purchase Transactions!
Let American Homeowners take their negative equity with them to another home.
Maria and Robert have good credit, good jobs and $30,000 in savings. The problem?: Their home is worth $60,000 less than what is currently owed (they bought in 2005). Today in 2012, Maria and Robert have another child and Robert’s Mom is living with them. They need to move from a 3 bedroom home to a 5 bedroom home. They can’t sell because they have negative equity and they don’t want to damage their credit with a short sale. Why isn’t Fannie Mae, Freddie Mac, FHA and VA administrations, along with Congress, allowing Maria and Robert to carry their Negative Equity to a new larger home?
Maria and Robert would be happy to Carryover their Negative Equity!
The Answer: Allow Maria and Robert and other Americans to Carry Their Negative Equity out of their current home.
The “Negative Equity Carryover Model” proposes that negative housing equity be carried forward to the purchase of a subsequent home to be repaid over a longer term. The equity carryover could also, if regulators wanted, be amortized down over an extended period (and totally forgiven over X years) slowly alleviating current pressure on both banks and homeowners.
Reduce disposition expense: Homeowners and banks would be able to reduce and defer the high cost of real estate disposition due to the inefficient short sale and foreclosure process.
Save consumer credit: Negative equity can be “carried” by a homeowner as a second lien onto the purchase of another home or onto a credit report as a personal line of credit. The Model suggests that the negative equity can be carried into the future as an independent debt/lien resulting in benefits to both the banks and homeowners. The homeowner’s credit would be saved and we as a nation could avoid the wholesale destruction and lockout of a future homeownership class due to damaged credit.
Lenders could reduce hits to their balance sheets and reserve requirements: Lenders could amortize the negative equity over years while still maintaining some lien position just in case homeownership equity returned.
Simply put, these “carryover” mortgages could be a hybrid between regular mortgages and equity sharing mortgages.
Gil Kerkbashian (847) 873-7295
HomePath
-Internet marketing. Some great info at: http://www.slideshare.net/HubSpot/marketing-charts-graphsdataapril2010slideshare . Call me if you want to exchange ideas regarding online marketing.
-HomePath is hot right now and we're an approved direct lender. Call me if you need an expedited preapproval.
|
|
-$10,000 Veterans purchase assistance: www.realestateloans.com/herohomes.pdf |
|
Please call if I can be of service. Locally owned, locally underwritten, locally funded. P.S. If you know of anyone that is interested in a home loan, please consider forwarding this email or contact information. Thank you in advance! |
Most Popular Home Loan Program Flyers...
-3% Conventional FHA alternative (non fha approved condos): www.realestateloans.com/3down.pdf
$10,000 Down Payment and Closing Costs Assistance for Veterans
$10,000 Down Payment and Closing Cost Assistance to Veterans
I am extremely proud to announce to Illinois military families an exclusive, comprehensive finance package of $10,000 in down payment assistance and closing cost assistance.
This program is a special promise to those men and women who recently served in Iraq and Afghanistan, safeguarding our freedom.
The “Welcome Home Heroes Finance package” features:
· First Mortgage
· A Program grant of $10,000 for down payment and closing cost assistance, in the form of a second mortgage with a minimul 2-year recapture - no payments.
· An optional Mortgage Credit Certificate (MCC) can be applied for to save the Veteran additional monies.
Active military, reservists, and National Guards are eligible -- but must be first time homebuyers. Retired Veterans need not be first-time homebuyers.
Foreclosure Activity Down for Month, Quarter, and Year
Foreclosure activity hit its lowest level in four years in 2011, decreasing by a third from the previous year according to data released today by RealtyTrac. One in every 69 housing units in the U.S. was subject to a filing during the year, 1.45 percent of the total housing stock. Activity also decreased for the month of December and for the fourth quarter of 2011 according to the U.S. Foreclosure Market Report covering the three periods which was released by the Irvine, California company this morning.
A total of 1,887,777 properties were subject to a foreclosure filing during the year. This was a decrease of 34 percent from 2010 and was 33 percent below the 2009 total and 19 percent below activity in 2008. Total U.S. foreclosure activity and the U.S. foreclosure rate in 2011 were both at their lowest annual level since 2007.
RealtyTrac, which states that its business model is to provide technology solutions and education resources to facilitate buying, selling and investing in real estate, did not attribute the declining activity to an overall improvement in the economy and housing market, but rather to flaws in the foreclosure process. Brandon Moore, chief executive officer of RealtyTrac said, "Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year. The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages - particularly in states with a judicial foreclosure process.
"There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010."
RealtyTrac compiles its data by tracking documents filed in all three stages of foreclosure:
1. Notice of Default (NOD) and Lis Pendens (LIS). This is the first legal notification from a lender that the borrower on a mortgage loan has defaulted under the terms of their mortgage and the lender intends to foreclose unless the loan is brought current.
2. Auction - Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS): if the borrower does not catch up on their payments the lender will file a notice of sale (the lender intends to sell the property). This notice is published in local paper and contains information pertaining to the date, time and subject property address.
3. Real Estate Owned or REO properties : "REO" stands for "real estate owned" and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.
Filings in total were also down for the fourth quarter and for the month of December while activity in the component data was mixed. During the quarter there were filings on 586,133 properties, down 4 percent from the third quarter and 27 percent from the same quarter in 2010. Default notices were down 6 percent quarter-over-quarter and 22 percent year-over year while scheduled auctions rose 4 percent for the quarter but were down 32 percent from Quarter 4, 2010. REOs were down 11 percent for the quarter and 24 percent from the same period in 2010.
Foreclosure activity hit a 49 month low in December with foreclosure filings reported on 205,024 properties during the month, one in every 222 units. This was a decrease of 9 percent from November and was 20 percent lower than one year earlier. Default notices decreased 19 percent from the previous month and were down 23 percent from December 2010; Scheduled foreclosure auctions decreased 12 percent from the previous month and were down 24 percent from December 2010; and bank repossessions (REO) increased 10 percent from the previous month but were still down 12 percent from December 2010.
The bad news dragged on for the three states that have topped the foreclosure charts almost from the beginning. While activity was down 31 percent from 2010, more than 6 percent of the housing units in Nevada (one in 16 units) had a foreclosure filing of some type during 2011. This is the fifth year that Nevada has had the highest rate of activity in the nation. Arizona registered the second highest rate for the third year in a row, with 4.14 percent of its stock (one in 24) involved in a filing.
While California dropped out of the top three states several times during the year, it still had the nation's third highest rate of activity for the year with one in every 31 housing units (3.19 percent) subject to a filing. Filings in December, however, were down 38 percent from the previous month. Other states with high levels of activity were Georgia, Utah, Michigan, and Florida.
Supporting the company's assertion that the downturn in activity is a function of dysfunction, RealtyTrac reports that foreclosures during the fourth quarter took an average of 348 days to complete, up from 336 days in the third quarter and 305 days in the fourth quarter of 2010. "The length of the average foreclosure process has increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures in earnest as the result of the so-called robo-signing controversy."
The average foreclosure process in New York has increased 37 percent during the same time period, and New York properties foreclosed in the fourth quarter took an average of 1,019 days to complete the foreclosure process - the longest of any state.
