The New York Times
The offers seem like answers to the prayers of a struggling homeowner: A promise of legal tactics to stall foreclosure, reduce mortgage balances and interest rates, or restore credit. But these so-called mass joinder lawsuits being advertising in mailings are fraudulent – sent out by companies purporting to be law firms, according to a consumer alert by the Federal Trade Commission’s (F.T.C.) website.
Making sense of the story
- Consumers can lose valuable time to these dishonest players – not to mention money. The nonprofit Lawyers Committee for Civil Rights Under Law estimates that homeowners nationwide who reported scams to its database have lost more than $60 million in the last two years alone.
- There are many credible law firms around to help homeowners. But some businesses might be promoting themselves as providers of legal services, they might have only one lawyer on retainer, as a way around F.T.C. rules that allow only lawyers to collect upfront fees on mortgage aid.
- Such firms, and people posing as lawyers, are fueling a 60 percent jump in complaints about mortgage scams this year, according to a report by the homeownership Preservation Foundation, which helps distressed homeowners.
- When speaking with a lawyer, consumers might ask about the lawyer’s track record, including documentation of successes via media reports or signed court documents awarding borrowers money or relief.
- Consumers should beware of promises. According to the Homeownership Preservation Foundation, “legitimate lawyers don’t make guarantees, just like doctors don’t.”
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Calif. median home price: March 2012: $291,080 (Source: C.A.R.)
Calif. highest median home price by region/county March 2012: San Mateo, $677,900 (Source: C.A.R.)
Calif. lowest median home price by region/county March 2012: Tehama, $108,000 (Source: C.A.R.)
Calif. Pending Home Sales Index: March 2012: 143.7, an increase from the revised 126.5 recorded in February.
Calif. Traditional Housing Affordability Index: First quarter 2012: 56 percent (Source: C.A.R.)
Mortgage rates: Week ending 5/10/2012 30-yr. fixed: 3.83% fees/points: 0.7% 15-yr. fixed: 3.05 fees/points: 0.7% 1-yr. adjustable: 2.73% Fees/points: 0.5% (Source: Freddie Mac)
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
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.
Read the full story
http://www.latimes.com/business/realestate/la-fi-harney-20120415,0,7325165.story
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.
Read the full story
http://www.nytimes.com/2012/04/08/realestate/mortgages-locking-in-peace-of-mind.html?_r=1&ref=realestate
Mortgage delinquencies continued a downward trend and were substantially below year-ago levels, while sales of existing homes in January and February marked the strongest start to a year since 2007, according to the Obama administration’s March housing scorecard.
However, data on home prices changed little from the previous month – marking a fifth month of seasonal lows.
The March Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:
Mortgage delinquency rates continued a downward trend and are substantially below year ago levels. In addition, foreclosure completions ticked downward last month, although increased activity is expected in the coming months as firms lift processing delays following the landmark mortgage servicing settlement reached with the five largest banks in early February.
More than 5.8 million modification arrangements were started between April 2009 and the end of February 2012.
As of February, more than 970,000 homeowners received a permanent HAMP modification, saving more than $530 on their mortgage payments each month.
http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-068
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.
Read the full story:
http://online.wsj.com/article/SB10001424052970204131004577237550558739754.html?mod=WSJ_RealEstate_LeftTopNews
Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco this week sent to Congress a strategic plan for the next phase of the conservatorships of Fannie Mae and Freddie Mac.
FHFA identified three strategic goals for the next phase of the conservatorships:
Build. Build a new infrastructure for the secondary mortgage market;
Contract. Gradually contract the Enterprises’ dominant presence in the marketplace while simplifying and shrinking their operations; and
Maintain. Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.
http://www.fhfa.gov/webfiles/23344/StrategicPlanConservatorshipsFINAL.pdf
