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  1. Could QE3 and HARP Rejuvenate the Housing Market?

    By on October 26, 2011

    It’s an interesting question.  While I maintain that any housing plan that does not address the problem of negative equity in the housing market ($700b+ worth) is incomplete, HARP and QE3 in conjunction could help a lot of people.

    Yesterday Neil Irwin wrote an article for the Washington Post discussing the stimulus options that the Federal Reserve could use in order to stimulate the economy.  One interesting possibility is that the Fed could purchase massive amounts of mortgage backed securities (MBS) in order to drive mortgage rates down even further.

    The Federal Reserve has a dual mandate, to foster maximum employment and maintain price stability.  Right now they are failing miserably at one half of that mandate.  Unemployment has been stubbornly high for more than 3 years now.  There are many reasons that unemployment hasn’t come down, and only some of the blame can be laid at the feet of the Fed.  Nevertheless, two massive rounds of quantitative easing have done little to solve this problem. According to the WAPO article:

    “Fed leaders will likely discuss specific options at a policy meeting next Tuesday and Wednesday, though they appear unlikely to take any major actions then. Data in recent weeks have pointed to a slightly improved economy, and many officials are skeptical that any new measures from the Fed to try to lower mortgage or other interest rates would really provide a boost. Three dissented from a related move at a September policy meeting”.

    The article indicates that while action is not likely right now, the Fed could soon engage in another round of mortgage-backed securities purchases. Fed Governor Daniel Tarullo commented last week that:

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    Category: Mortgage Rates

  2. Home Affordable Refinance Program (HARP) Changes May Help 1 Million US Homeowners

    By on October 24, 2011

    In a positive development, the government agency that regulates the housing industry has announced key changes to the 2 year old HARP program that may open the door to refinancing for a million or more US homeowners.  Key components of the revised program include:

    • Extension of the program throughDecember 31, 2013
    • Eligible loans must have been purchased by Fannie Mae or Freddie Mac after May 31, 2009 and have a loan-to-value ratio of greater than 80%
    • Removal of the 125% of current value loan cap
    • Elimination of risk fees if refi into shorter term loan, fee reduction if refi into 30 year loan
    • Homeowners must be current on loan for previous six months
    • New appraisal may not be needed
    • Lenders protected from buybacks (except in case of fraud)

    Lenders have not been provided guidelines for implementation of the program but will receive them by November 15, 2011.  Lender participation is not mandatory but wide participation is expected.

    Total Mortgage Services, LLC is prepared to guide you through the HARP refinance process with mortgage professionals who are experienced and determined to improve the financial position of their clients.

    To find out if your loan is owned by Fannie or Freddie, to discuss the program requirements further or lock in current rates:

    •              speak with a mortgage professional now by calling 877-868-2509

    •              Chat Live on-line with a mortgage professional

    Category: Mortgage Rates

  3. FHFA to Overhaul Underwater Refinance Program – Will the Changes Help?

    2 By on October 24, 2011

    The Obama Administration, the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac have announced a number of changes that are being made to the Home Affordable Refinance Program (HARP) that may increase the impact of a program that has to this point fallen woefully short of its goal of helping underwater homeowners refinance their mortgages.

    HARP was rolled out in 2009 with the purpose of allowing underwater homeowners to refinance their homes at current rates, which are substantially lower than rates were in 2005-7, which is when many underwater mortgages were originated.  Generally speaking, homeowners with high loan-to-value ratios are precluded from refinancing because lenders are reluctant to refinance the mortgage on a home where the homeowner has little equity (negative equity is the number one predictor of default).  The program was originally aimed at those with LTVs between 80-105%, and was later expanded to LTVs up to 125% (although many lenders only participate up to 105%).  According to the Wall Street Journal, 900,000 people have refinanced through HARP since the program started, and only 72,000 of these borrowers had LTVs between 105-125%.

    Some of the proposed changes to the program include:

    • Getting rid of some risk-based fees for borrowers who refi into shorter-term mortgages.  A variety of other fees would be eliminated.
    • The 125% LTV ceiling would be eliminated for fixed rate loans backed by Fannie or Freddie
    • The need for a new appraisal where there is a “reliable automated valuation model” would be eliminated.
    • The HARP program would be extended through December 31, 2013 for loans originated or sold to Fannie and Freddie before May 31, 2009.
    • Rules will be changed so that lenders will be shielded from the put back risk on HARP loans.  This may encourage more lenders to refi higher LTV loans.
    Category: Mortgage Rates

  4. CBO: Large Scale Refinancing Program Would Not Address Many Problems Facing Housing Market

    By on September 8, 2011

    You might’ve heard rumors a couple weeks ago that the Obama Adminstration was considering proposing some sort of broad refinancing program. Although the rumors contained no specifics as to what the plan might actually be, it would most likely allow those with government backed loans to refinance at today’s record low mortgage rates, possibly even if they were far underwater and wouldn’t meet traditional refinancing underwriting standards.

    The main constraints on refinancing right now are that many who can refinance already did so and have low enough rates that refinancing doesn’t make financial sense and that many homeowners who have rates high enough to justify refinancing are unable to do so because the value of their homes has declined and they no longer meet underwriting guidelines.

    Along these lines the Congressional Budget Office released an analysis of a theoretical large-scale mortgage refinancing program earlier this week. The proposed program would “relax current income and loan-to-value restrictions for borrowers who wish to refinance and whose mortgages are currently insured by Fannie Mae, Freddie Mac, or the Federal Housing Administration”.  From the report:

    “Relative to the status quo, the specific program analyzed here is estimated to cause an additional 2.9 million mortgages to be refinanced, resulting in 111,000 fewer defaults on those loans and estimated savings for the GSEs and FHA of $3.9 billion on their credit guarantee exposure, measured on a fair-value basis. Offsetting those savings, federal investors in MBSs, including the Federal Reserve, the GSEs, and the Treasury, would experience an estimated fair-value loss of $4.5 billion. Therefore, on a fair-value basis, the specific program analyzed here would have an estimated cost to the federal government of $0.6 billion”.

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    Category: Mortgage Rates

  5. Total Mortgage Offering Low Rates on HARP Loans

    By on July 25, 2011

    The Home Affordable Refinance Program is a government program that aims to help underwater borrowers refinance their homes.  A homeowner is underwater when they owe more money on their mortgage than their home is worth (this is also known as being upside-down or having negative equity).  When someone is underwater, they have a loan-to-value ratio that is greater than 100%, and this generally precludes them from refinancing their mortgage.

    The big problem with this is that many people who are underwater bought at or close to the peak of the housing market (around 2006).  At this time, mortgage rates were significantly higher than they are now.  Many of these borrowers have good credit and a history of making payments, but are unable to take advantage of today’s lower rates.

    The program allows those who have loans that are currently owned by Fannie Mae or Freddie Mac and are underwater (up to LTVs of 105%, and possibly 125% depending upon your lender) to refinance into a new Fannie or Freddie loan at today’s low rates (see Fannie Mae’s website for full details).

    As part of the program, the borrower has to move to a “more stable product”.  This could mean refinancing from an interest only loan to a fully amortizing loan, moving from an adjustable rate mortgage to a fixed rate mortgage, moving from a short-term ARM to a longer-term ARM, or switching from a 30 year fixed rate mortgage to a shorter-term fixed rate mortgage.

    To get more information on HARP loans, call one of our licensed loan officers at 877-868-2503, or fill out the form to the right. Don’t let being underwater keep you from saving money on your mortgage payments.  

     

     

    Category: Mortgage Rates

  6. Should Home Prices Be Allowed to Bottom Out?

    By on September 7, 2010

     

    Since the collapse of the housing bubble about three years ago, the federal government has enacted a variety of strategies aimed at supporting home values.  First there was the first time homebuyer and repeat homebuyer tax credits, which have cost taxpayers $16.2 billion thusfar.  The tax credits succeeded in goosing demand for homes in the short term, but since their expiration, home sales have collapsed.  There is strong evidence that home prices have resumed falling in the absence of government support, brining into question the effectiveness of the program.

    Several programs were enacted that would focus on mortgage modification, principal reduction, or short sales, such as Home Afforadble Modification Program (HAMP), Home Affordable Refinance Program (HARP), Home Affordable Foreclosure Alternatives (HAFA), and the new FHA Short Refi Program (which begins today).  These programs have met with varying degrees of success, but given the state of the housing market right now, we can surmise none have been a panacaea for the problems we face. 

    Housing sales have plummeted since the expiration of the first time homebuyer tax credit at the end of April (existing home sales just hit their lowest point in 14 years).  Presently, there is a 12.5 month supply of homes on the market (a normal market has 6 months supply).  These conditions, along with a weak labor market, will likely lead to further declines in home value.       

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    Category: Mortgage Rates

  7. Refinance into Low Mortgage Rates with HARP

    By on May 26, 2010
    That's the wrong kind of harp

    That's the wrong kind of harp

    Last year the Obama administration introduced a program called HARP, the Home Affordable Refinance Program, that potentially allows underwater borrowers who might not otherwise be able to take advantage of extremely low current mortgage rates to refinance their mortgages.

    Due to declining housing values, many borrowers have lost equity in their homes and now owe more on their mortgage than what their home is worth.  When a home owner is underwater, they typically cannot refinance their home, which causes them to miss out on the opportunity to save thousands of dollars with a lower mortgage rate.  As part of an effort to keep Americans in their homes, HARP was introduced.  Reducing the mortgage payments through refinancing makes it less likely that the underwater homeowner would default.

    Borrowers with a loan to value ratio of up to 125 percent may be refinanced under HARP, depending upon the guidelines of the loan servicer.

    Those with multiple mortgages on the house may be eligible, but the lender with the junior lien mortgage must agree to remain in a subordinate decision, and the borrower must be able to meet the new payment terms on the first lien.  If the borrower was previously required to have mortgage insurance, they need to continue with it.  Delinquent homeowners do not qualify, you must be current on your mortgage to take advantage of HARP.  The program expires on June 30, 2011.

    For more information on HARP refinancing and eligibility requirements, check the government’s HARP website.

    Category: Mortgage Rates

  8. Mortgage Rates Projected to Continuously Rise

    1 By on April 15, 2010

    Mortgage Rates Projected to Continuously Rise

    As the overall outlook for economic recovery continues to improve, mortgage rates are expected to experience a sustained increase. Despite the unrelenting effort by the federal government to artificially keep mortgage rates at or near historic lows for more than a year, the Federal Reserve has taken its proverbial foot off the gas in an attempt to allow the housing market to heal without government intervention. Coupled with improved unemployment figures and the ever-increasing government debt, interest rates will undoubtedly go up.

    As the housing market continues to recover from unrelenting property value declines and unprecedented foreclosure activity, it appears mortgage rates are highly unlikely to go any lower than where they are currently at, leaving them with nowhere to go but up. According to last week’s figures, the average on a 30-year fixed-rate mortgage was 5.26 percent, which is still significantly lower than the 5.48 percent from April 2009.

    The rate and term refinance boom that had been generated by the Obama administration’s Home Affordable Refinance Program (HARP) has effectively dried up. There is an extremely limited number of homeowners remaining that have not already refinanced, who could still qualify. As analysts predict a rise in mortgage rates – likely reaching 5.5 percent by August and 6 percent or higher by December – homeowners who may have missed their chance at refinancing can now expect higher monthly mortgage payments than they may have originally anticipated.

    Prospective homeowners are in the same boat, but any procrastination will only compound their potential financial windfall as the $8,000 first-time home buyer tax credit and the $6,500 move-up home buyer tax credit will expire in just over two weeks if a purchase agreement is not signed with a seller by April 30.

    Regrettably, too many Americans have become accustomed to the incredibly low mortgage rates from the past year or so, and believed that they would remain extremely low for a more prolonged period of time. The question is no longer whether mortgage rates will rise, but rather how much will they go up? All good things come to an end, so it’s just a matter of time before mortgage rates increase rather sharply.

    Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Mortgage Rates

  9. Home Purchases Expected to Rise

    By on March 5, 2010

    Home Purchases Expected to Rise

    Despite the Mortgage Bankers Associations’ report two weeks ago that purchase applications fell to a 13-year low, mortgage analysts now anticipate home sales to restart yet again as the deadline for the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit looms. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of Realtors, says the recent decline in purchase transactions is due in large part to the delay among homebuyers that have been searching for a home, then ultimately closing on it. Those homebuyers hoping to take advantage of the popular tax credits have until April 30, 2010 to find a home and sign a purchase agreement with the seller. Then, the purchase transaction must close by June 30, 2010 in order for the tax credits to be applied.

    In a statement, Yun said, “People who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales.” In contrast, Yun also concedes the recent decline in home sales is not encouraging and that the expectation of a complete recovery would be premature. In support of Yun’s premise, a market analysis from Briefing.com indicated the decline in purchase applications did catch many housing analysts off guard.

    Even though there are concerns among industry analysts that the housing market remains fragile, Yun’s optimistic outlook for an increase in purchase transactions is strengthened with the historically low current mortgage rates the mortgage industry continues to enjoy. To further encourage the housing relief effort, the Federal Housing Finance Agency (FHFA) announced yesterday that the Home Affordable Refinance Program (HARP) has been extended for another year to June 30, 2011. The HARP program was created by the federal government to allow homeowners whose mortgage loans are owned by Fannie Mae or Freddie Mac, and the loan-to-value (LTV) of their home is less than is owed on an existing mortgage, to refinance and take advantage of the incredibly low current mortgage rates.

    Robert Hyder

    Follow Total Mortgage on Twitter

    Category: Mortgage Rate Trends and Analysis

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