Freddie Mac reported this week that 79 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table in the first quarter of 2012.
Of these borrowers, 58 percent maintained about the same loan amount, and 21 percent of refinancing homeowners reduced their principal balance; the share of borrowers that kept about the same loan amount was the highest in the 26-year history of the analysis.
“Cash-out” borrowers, those who increased their loan balance by at least five percent, represented 21 percent of all refinance loans; the weighted average cash-out share during the 1985 to 2008 period was 50 percent.
The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.5 percentage points, or a savings of about 27 percent in interest rate, the largest percent reduction recorded in the 27 years of analysis. Over the first year of the refinance loan life, the median borrower will save about $2,900 in interest payments on a $200,000 loan.
http://www2.realtoractioncenter.com/site/R?i=1w8sWhgcjEnVkWSmcc_UQQ
CNNMoney
The Federal Housing Finance Agency laid out new rules aimed at speeding up the short sale process, a move that could keep many homes from falling into foreclosure.
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http://money.cnn.com/2012/04/19/real_estate/short-sales/index.htm?iid=HP_LN
Los Angeles Times
A new statistical analysis, based on a large sample of all mortgage applications approved and denied in recent months, offers valuable benchmakers for anyone thinking about refinancing a home purchase or refinancing an exisiting loan.
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http://www.latimes.com/business/realestate/la-fi-harney-20120415,0,7325165.story
Late yesterday, the Federal Housing Finance Agency (FHFA) announced it has directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu, and deeds-for-lease in order to help more homeowners avoid foreclosure. The effort will come in stages with the first taking place this June. The new, aligned timelines include the requirement that mortgage servicers review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer.
“C.A.R. applauds the FHFA for taking this important step to streamline the short sale process so that the housing market can begin a full recovery,” said C.A.R. President LeFrancis Arnold. “We have long called for similar improvements to help ensure successful short sales and look forward to hearing about additional enhancements to further reform the process.”
The FHFA’s directive calls for servicers to:
Review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;
Provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days;
Make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package
By the end of this year, Fannie Mae and Freddie Mac will announce additional enhancements that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.
http://www.car.org/newsstand/newsreleases/2012releases/fhfastreamline
The New York Times
Mortgage rates are near historic lows, but they are rising, leading some borrowers to consider locking in their rate. When borrowers lock in their interest rate, it freezes the terms of the loan while it is being processed, potentially saving borrowers thousands of dollars over the life of the mortgage.
Making sense of the story
- Locking in a rate may be especially important for those who are refinancing, where even a quarter of a percentage point could skew a borrower’s calculations and make a refinancing less financially desirable.
- Rate locks can provide buyers with some peace of mind, not to mention one less thing to think about in an otherwise onerous application process.
- Lenders typically will give loan rate guarantee agreements when a borrower has a purchase agreement, but a few will provide them to those who are preapproved for a mortgage.
- The cost of reserving an interest rate depends both on the duration of the lock and the amount of the loan. The longer the lock, the more costly it is. Most locks are for 30, 45, or 60 days, but some lenders will go as long as six months.
- Most lenders offer some version of a free lock, though it may be only for 30 days. Others charge points – or fractions thereof – based on the loan size, which could amount to several hundred dollars. One point is equal to 1 percent of the loan amount. Sometimes these charges are refundable at closing.
- Borrowers may want to skip a rate lock, or delay taking one, if they are unsure when their home purchase will close.
- Knowing how long to lock in a rate requires a clear picture of the mortgage process, and a good estimate from the lender on how long it will take to approve the loan and complete all the paperwork and other requirements. For some lenders handling refinancing, this can be 15 or 20 days; others take longer.
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http://www.nytimes.com/2012/04/08/realestate/mortgages-locking-in-peace-of-mind.html?_r=1&ref=realestate
The Consumer Financial Protection Bureau (CFPB) has learned that businesses have received emails that falsely purport to originate from the CFPB. These emails contain the subject line “Consumer Complaint regarding your Company.” They direct recipients to respond to consumer complaints filed against them.
The CFPB did not send or direct anyone to send these emails.
These emails may be malicious. To minimize the risks they may present, recipients are advised to do the following:
1. Do not respond to the email
2. Refrain from opening or clicking on any links in such emails
3. Do not provide any personal, consumer, or commercial information in response to these emails
The CFPB continues to investigate this incident and will respond accordingly.
The Wall Street Journal
As more people refinance home mortgages, some are getting tripped up by tax-deduction rules. Those who decide to borrow more than they owe on their existing mortgage often assume they can write off interest on the whole new loan, but in many cases they can’t.
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http://online.wsj.com/article/SB10001424052970203960804577239152801934074.html?mod=WSJ_RealEstate_MIDDLETopNews
The New York Times
The guarantee fee – a hidden fee inside the interest rate quoted on a home mortgage – has been mandated by Congress to increase this spring, and other increases are likely later to take place later this year and next.
Making sense of the story
- The guarantee fee has been charged by government sponsored entities like Fannie Mae and Freddie Mac for more than three decades. The fee does not show up in borrowers’ mortgage documents or good-faith estimates, and it is little known outside the industry. According to a Fannie Mae spokesman, the fee “gets incorporated into the underlying rate the borrower pays.”
- An interest rate is usually made of up three parts: The largest goes to the bank or the investors who buy the loan; the smaller portion is for the mortgage servicer that collects monthly payments; and then there’s the guarantee fee. Fannie and Freddie charge guarantee fees as a form of insurance against default for the loans they acquire and resell to investors.
- The guarantee fee will rise 10 basis points on April 1; the increase was included in the two-month extension of the payroll tax reduction last December. A basis point is equal to one one-hundredth of 1 percent, or 0.01 percent.
- One way to avoid the guarantee fee is to use a lender that does not sell off its loans – for instance, a community bank or a credit union.
- In addition to offsetting risks, the fees provide a primary source of revenue for Fannie Mae and Freddie Mac. Both organizations started raising fee rates in 2008 during the housing crisis, as foreclosure costs rose.
The Wall Street Journal
Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower.
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http://online.wsj.com/article/SB10001424052970204131004577237550558739754.html?mod=WSJ_RealEstate_LeftTopNews
The Los Angeles Times
A Mortgage Bankers Association report Thursday said that after seasonal adjustments, 7.58 percent of all residential mortgages were delinquent by at least one payment as of the fourth quarter of 2011. That was down from 7.99 percent in the third quarter of 2011 and 8.25 percent in the fourth quarter of 2010.
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http://www.latimes.com/business/money/la-fi-mo-mortgage-delinquencies-20120216,0,5231531.story
