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Mortgages: Yet More Good News for Borrowers

December 22nd, 2008

Freddie Mac unveiled yet more good mortgage news for borrowers on Friday in its weekly survey of average rates. The figure for a 30-year loan was 5.19 percent, which the Wall Street Journal says is the lowest since records began in 1971, 37 years ago. New 15-year mortgages were averaging 4.92 percent.

The Journal also pointed out that mortgages generally closely track long-term government notes, and that these are also continuing to decline. This means that there’s every reason to expect mortgage rates to continue their downward trend.

All of this positivity is translating into a much larger volume of mortgage applications. The Mortgage Bankers Association reports that these are up 37.3 percent up on the same week last year. However, refinancing represents 76.9 percent of all activity, which may not be quite such good news.

More on that soon.

After rock bottom comes the bounce

December 15th, 2008

CNN is trailing yet another doom-and-gloom report. This one, which will be out later today, predicts that we’re less than three weeks away from yet another miserably depressing milestone. Read the rest of this entry »


September 17th, 2008

Looks like FHA’s Hope for Homeowners is going over like a lead balloon.  According to CNNMoney, most lenders are rejecting the voluntary programs in favor of their own. The FHA programs requires that the lender write down the balance of the loan to 5% less than the value of the home and in addition pay FHA its fees to originate the new loan. So FHA gets a new loan that is a realistic LTV and at this point unlikely to have much of a downside, while the original lender takes the loss.

Not surprisingly, lenders prefer to take their chances with their own solutions, for example, instituting repayment plans alllowing borrowers to catch up their arreages over time and leaving the loans on the books at full value. Or modifying the terms of the loans to make payments affordable. Principal writedowns force the lender to give up any chance to make up the values when housing prices recover–they are considered too drastic and permanent a solution in most cases.