"Americans are taking advantage of interest rates near record lows to trim monthly mortgage payments as mounting job losses and plunging wealth pinch household budgets. Policy steps to cut foreclosures and unclog credit markets may ease the housing slump and help revive economic growth later this year."Shobhana Chandra,April 22 (Bloomberg).
Two other Bloomberg writers, Brian Louis and Kathleen M. Howley in their piece published two days ago, quoted Robert Edelstein, a professor at the Haas School of Business at the University of California, Berkeley as saying "Home loans may go as low as 4 percent if the economy worsens." "Record foreclosures,falling home prices and an economy that has lost 5.1 million jobs since December 2007 will pressure Bernanke to further reduce borrowing costs."
The two writers noted that "Bernanke, a Harvard-educated student of the Great Depression who spent his 20-year academic career writing and teaching about the
1930s,is using his knowledge of that era to avoid the missteps policy makers made then. He's bringing down mortgage rates,supporting the banking system, and buying back government debt and mortgage-backed securities to relieve the scarcity of credit."
The incredulity of these two - how easily do we forget! One of the first things Bernanke did following his appointment as Fed Chairman was to initiate a series of rate hikes (duh!). What was he thinking about when he was doing that? Where and how did the nation benefit from his "20-year academic career of writing and teaching about the 1930s? How will lower rates - as good as that may be, help the hundreds of thousands of homeowners who are now homeless,indigent,completely ruined. When others were talking about recession all the way back in 2007 where was the professor? who was Chairman of the Board?
The economy is a wreck and those who are charged to ensure good health and well-being failed, and failed miserably.A possible 4 percent mortgage rate is seen to be a good thing, and home owners as well as home buyers should benefit if it ever happens - when this is all over Bernanke should wash his hands and go home.
Friday, April 24, 2009
Thursday, April 23, 2009
HOME MORTGAGES: Are Lower Rates In Our Future???
In our last Post, just over a week ago - Tax Day to be exact, we focused on past statements made by Federal Reserve Chairman, Ben Bernanke, and recent utterances of his. We questioned whether his statements about the economy generally, and the housing(mortgage) market specifically, were posturing because of political considerations, as we had seen during and leading up to the general elections toward the end of 2008.
An academic first and foremost, many believed that Bernanke's move from the Ivory Towers of Academia to become Federal Reserve Chairman, enabled him to "experiment" with the theories he lectured about in the classroom. One school of thought is of the opinion that this, in effect, was a contributing factor to much of the economic downturn the country is experiencing today.
It appears that even with the economic stimulus plan - monies to the banks - monies to the auto industry, and to others - the expectations for a quick economic turn a round is not at this time clearly evident. Some liken the situation to a helmsman attempting to turn an aircraft carrier or supertanker - it will happen... but...it takes time.
As the economy is taking some time to turn around, more Americans than ever before, are loosing their jobs, which leads eventually to loosing their homes in foreclosure actions, which brings more homes into an already saturated housing market,further lowering home values contributing to greater losses of equity in homes nationwide impeding the progress of the economy's turn.
Faced with a soaring Budget Deficit,an overburdened Treasury,millions of lost jobs and counting since the start of the recession, what answers has Professor Bernanke for the nation.Some say the answer is, even lower rates - we shall see.
An academic first and foremost, many believed that Bernanke's move from the Ivory Towers of Academia to become Federal Reserve Chairman, enabled him to "experiment" with the theories he lectured about in the classroom. One school of thought is of the opinion that this, in effect, was a contributing factor to much of the economic downturn the country is experiencing today.
It appears that even with the economic stimulus plan - monies to the banks - monies to the auto industry, and to others - the expectations for a quick economic turn a round is not at this time clearly evident. Some liken the situation to a helmsman attempting to turn an aircraft carrier or supertanker - it will happen... but...it takes time.
As the economy is taking some time to turn around, more Americans than ever before, are loosing their jobs, which leads eventually to loosing their homes in foreclosure actions, which brings more homes into an already saturated housing market,further lowering home values contributing to greater losses of equity in homes nationwide impeding the progress of the economy's turn.
Faced with a soaring Budget Deficit,an overburdened Treasury,millions of lost jobs and counting since the start of the recession, what answers has Professor Bernanke for the nation.Some say the answer is, even lower rates - we shall see.
Wednesday, April 15, 2009
MORTGAGES: The Posture of Politics or the Politics of Posturing?
"Today's economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence." Fed Bank Chairman, Ben Bernanke, yesterday, in a talk delivered in Atlanta.
That whole statement there make you go..."where did I hear that before?" Follow my lead here - replace the word "foundation" with "fundamentals" - does that jog your memory....yeah!! it did, didn't it? So I will not go into that... okay?
According to Bloomberg, today, April 15, 2009 ( Tax Day) "The number of mortgage applications in the U.S. fell last week for the first time in more than a month, indicating any stabilization in housing will be slow to materialize even as borrowing costs drop.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 11 percent to 1,113.2 in the week ended April 10, the lowest level in a month, from 1,250.6 the prior week. The group's refinancing gauge and purchase measure each dropped 11 percent. "
The Bloomberg report recalls that "Increases in home sales and residential construction have been among the signs Federal Reserve Chairman Ben S. Bernanke says show the economic slump is starting to slow."
The Fed Chairman acknowledged the development in his Atlanta address yesterday when he said "Recently we have seen tentative signs hat the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending including the sales on new motor vehicles."
So my question to you is: Did Mr Bernanke read the Mortgage Bankers Association report? If so, Did he read it while standing on his head? Did he read it from right to left? As if any of those activities would have aided his comprehension. Maybe he saw other reports which he choose not to divulge - Could his statement be seen as political posturing - sending a positive message - or is it just politics posturing - How long were we seeing and experiencing recessionary trends - can anyone recall the political posturing at the time - the country was told that everything was alright - there were no recession - when confronted with the facts of the economic situation in the U.S. Bush II responded by saying that he would not call it a recession unless the economists called it a recession - was that politics posturing, or what?
Where was Bernanke - Why did he not state the obvious? Was the lack of a timely and factual statement on the economy a deliberate act of political posturing, or was it politics posturing in the heated and hotly contested political years leading up to the recent Presidential Elections.
So now all the pain and suffering which could have been so much less severe had those who were expected to do their jobs without fear of favor had done so, rather than choosing to wade in waters they are not familiar with.
That whole statement there make you go..."where did I hear that before?" Follow my lead here - replace the word "foundation" with "fundamentals" - does that jog your memory....yeah!! it did, didn't it? So I will not go into that... okay?
According to Bloomberg, today, April 15, 2009 ( Tax Day) "The number of mortgage applications in the U.S. fell last week for the first time in more than a month, indicating any stabilization in housing will be slow to materialize even as borrowing costs drop.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 11 percent to 1,113.2 in the week ended April 10, the lowest level in a month, from 1,250.6 the prior week. The group's refinancing gauge and purchase measure each dropped 11 percent. "
The Bloomberg report recalls that "Increases in home sales and residential construction have been among the signs Federal Reserve Chairman Ben S. Bernanke says show the economic slump is starting to slow."
The Fed Chairman acknowledged the development in his Atlanta address yesterday when he said "Recently we have seen tentative signs hat the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending including the sales on new motor vehicles."
So my question to you is: Did Mr Bernanke read the Mortgage Bankers Association report? If so, Did he read it while standing on his head? Did he read it from right to left? As if any of those activities would have aided his comprehension. Maybe he saw other reports which he choose not to divulge - Could his statement be seen as political posturing - sending a positive message - or is it just politics posturing - How long were we seeing and experiencing recessionary trends - can anyone recall the political posturing at the time - the country was told that everything was alright - there were no recession - when confronted with the facts of the economic situation in the U.S. Bush II responded by saying that he would not call it a recession unless the economists called it a recession - was that politics posturing, or what?
Where was Bernanke - Why did he not state the obvious? Was the lack of a timely and factual statement on the economy a deliberate act of political posturing, or was it politics posturing in the heated and hotly contested political years leading up to the recent Presidential Elections.
So now all the pain and suffering which could have been so much less severe had those who were expected to do their jobs without fear of favor had done so, rather than choosing to wade in waters they are not familiar with.
Thursday, April 9, 2009
Mortgage Loans - The Front End and the Back End
In any economy at any time $8,000 is a lot of money. To be guaranteed by the U. S. Government that you could have a credit of up to $8,000 if you were to buy a home in the next 8 months is more than enough incentive to send first time-home home buyers ( that is a qualification) into the market place looking for homes.
Mortgage Interest Rates are very, very low - home prices are extremely low. Securing a mortgage loan and purchasing a home at this opportune time is a must-do for tens if not hundreds of thousands across America.
Adding their lot to the mix are certain members of the Real Estate Industry, who have obviously taken a page from the playbook of the auto industry. More incentives for the potential home buyer - how about not having to worry about mortgage payments for 6 months if you or your spouse were to lose your jobs.
According to a report by Diana Golobay carried two days ago on Housingwire.com "the California Association of Realtors (CAR) announced late last week it would offer a new "mortgage protection program" that promises first-time home buyers .....the guarantee of up to $1,500 per month for six months, in the event of job loss due to layoffs." The report goes on to inform that " ...co-buyers get up to $750 per month for up to six months, in case of layoffs. The program also includes benefits for accidental disability as well as a $10,000 death benefit, CAR said."
With these additional incentives now available at the back end of a mortgage loan, home buyers, on the front end, can take advantage of the $8,000 income tax credit, and easily slide into a new home loan knowing there is a cushion, at the other end, to ease their pain if they should fall. Yet, it is a good thing as it could remove from the marketplace the abundance of foreclosed homes that are out there - that's on the front end, while providing a mechanism for slowing the emergence of new foreclosed homes into the marketplace - this is on the back end - you with me?
Mortgage Interest Rates are very, very low - home prices are extremely low. Securing a mortgage loan and purchasing a home at this opportune time is a must-do for tens if not hundreds of thousands across America.
Adding their lot to the mix are certain members of the Real Estate Industry, who have obviously taken a page from the playbook of the auto industry. More incentives for the potential home buyer - how about not having to worry about mortgage payments for 6 months if you or your spouse were to lose your jobs.
According to a report by Diana Golobay carried two days ago on Housingwire.com "the California Association of Realtors (CAR) announced late last week it would offer a new "mortgage protection program" that promises first-time home buyers .....the guarantee of up to $1,500 per month for six months, in the event of job loss due to layoffs." The report goes on to inform that " ...co-buyers get up to $750 per month for up to six months, in case of layoffs. The program also includes benefits for accidental disability as well as a $10,000 death benefit, CAR said."
With these additional incentives now available at the back end of a mortgage loan, home buyers, on the front end, can take advantage of the $8,000 income tax credit, and easily slide into a new home loan knowing there is a cushion, at the other end, to ease their pain if they should fall. Yet, it is a good thing as it could remove from the marketplace the abundance of foreclosed homes that are out there - that's on the front end, while providing a mechanism for slowing the emergence of new foreclosed homes into the marketplace - this is on the back end - you with me?
Tuesday, April 7, 2009
New Mortgage Loan Program - 105% Loan To Value????
According to information received by this Post, two National Mortgage Lenders, Countrywide, owned and controlled by Bank of America, and Metlife Home Loans, a new mortgage loan refinance program called the Fannie Mae Refi Plus program commenced yesterday.
As its name indicates, this program is only for mortgage refinances of currently owned homes, and available to all homeowners under the recently passed American Recovery and Reinvestment Act of 2009. Availability, however, remains subject to certain conditions, which I will reveal shortly - the good news first, okay?
What is positive (if it could be viewed that way) is that Loan To Value ratios of up to 105% is allowed. Aside from owner-occupied homes, second homes and investment properties are also acceptable. Existing second liens are okay, if subjugated and Credit scores as low as 580 will be considered. For certain Counties around the nation, the conforming limit is set at $729,750 - more on this last in a bit.
Original First Mortgage Loans with a loan to value greater that 80% and those with Mortgage Insurance (MI), will not be considered, not at this time, anyway. Consolidation of a second lien into the new loan is also not allowed, neither are loans with new subordinate financing. Other ineligible loans are Balloon Mortgages, Interest Only Programs and Reverse Mortgages. It appears that the Mortgage Lender will also be developing their own criterion in addition to what the Treasury Departments' program calls for.
The program is not final at this time. The program will be expanded and undergo additional changes to facilitate more refinance options in keeping with the goals of the Home Affordability Refinance Initiative released earlier this year on March 4, 2009.
The Conforming limits is the new limit of $729,750 set by Congress earlier this year under the American Recovery and Reinvestment Act of 2009. However, loans acquired in 2009, but originated prior to July 1st 2007, will remain subject to the previously announced 2009 loan limits - Refer to our post of 03/25/2009. These limits were set under the provisions of the Housing and Economic Recovery Act of 2008.
As its name indicates, this program is only for mortgage refinances of currently owned homes, and available to all homeowners under the recently passed American Recovery and Reinvestment Act of 2009. Availability, however, remains subject to certain conditions, which I will reveal shortly - the good news first, okay?
What is positive (if it could be viewed that way) is that Loan To Value ratios of up to 105% is allowed. Aside from owner-occupied homes, second homes and investment properties are also acceptable. Existing second liens are okay, if subjugated and Credit scores as low as 580 will be considered. For certain Counties around the nation, the conforming limit is set at $729,750 - more on this last in a bit.
Original First Mortgage Loans with a loan to value greater that 80% and those with Mortgage Insurance (MI), will not be considered, not at this time, anyway. Consolidation of a second lien into the new loan is also not allowed, neither are loans with new subordinate financing. Other ineligible loans are Balloon Mortgages, Interest Only Programs and Reverse Mortgages. It appears that the Mortgage Lender will also be developing their own criterion in addition to what the Treasury Departments' program calls for.
The program is not final at this time. The program will be expanded and undergo additional changes to facilitate more refinance options in keeping with the goals of the Home Affordability Refinance Initiative released earlier this year on March 4, 2009.
The Conforming limits is the new limit of $729,750 set by Congress earlier this year under the American Recovery and Reinvestment Act of 2009. However, loans acquired in 2009, but originated prior to July 1st 2007, will remain subject to the previously announced 2009 loan limits - Refer to our post of 03/25/2009. These limits were set under the provisions of the Housing and Economic Recovery Act of 2008.
Thursday, April 2, 2009
Mortgages, Monies and Markets
The Mortgage Market is in an uncertain turmoil - on the one hand some homeowners are struggling to keep up with their mortgages while dreading the seemingly inevitable pink slip. Lucia Mutikani of Reuters reported today from Washington that "The number of U.S. workers filing new claims for jobless benefits surged to a 26 1/2 year high last week..." She goes on to say that Thursday's data showed "..that layoffs have yet to peak even as other signaled some improvement in the economy.
Other homeowners are trying desperately to reduce their monthly mortgage payments, in sometimes futile efforts, to keep possession of their homes. Loan Modification and Loan Restructuring does not work for all.
Buyers, on the other hand, are seeking to take advantage of the $8000 tax credit offered to first-time home buyers as part of the stimulus package. Many are not finding it easy though, as the guidelines Banks are now using to make home mortgage loans are so restrictive, few can qualify to buy a home at this time. Due to the foreclosure crisis home values have plummeted, making homes cheaper to purchase. Due to recent developments in the market and the actions of the government interest rates for 30-year fixed conforming loans are now below 5 percent.
According to Alan Zibel, a Real Estate Writer with the Associated Press "Mortgage finance Giant Freddie Mac said Thursday that the average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week..." Yet many who would want to buy, cannot. They are just not able to qualify. Insufficient income, weak or shaky credit and a lack of required reserves (liquid assets) in the bank often elicit a negative response from lenders.
Reports are, however that the ongoing recession appears to be levelling off. With the G20 meeting in London as a backdrop it appears that some minimal policy successes were achieved for attacking the flagging world economy. Yet with contrary economic philosophies between the U.S. and Britain on the one hand and Continental Europe; led by France and Germany on the other, enactment of agreed upon policies will be predicated upon local (national) politics - not the photo ops.
Meanwhile, in the U.S. and across the globe Mortgages are difficult to acquire, Money is scarce and the Market is uncertain.
Other homeowners are trying desperately to reduce their monthly mortgage payments, in sometimes futile efforts, to keep possession of their homes. Loan Modification and Loan Restructuring does not work for all.
Buyers, on the other hand, are seeking to take advantage of the $8000 tax credit offered to first-time home buyers as part of the stimulus package. Many are not finding it easy though, as the guidelines Banks are now using to make home mortgage loans are so restrictive, few can qualify to buy a home at this time. Due to the foreclosure crisis home values have plummeted, making homes cheaper to purchase. Due to recent developments in the market and the actions of the government interest rates for 30-year fixed conforming loans are now below 5 percent.
According to Alan Zibel, a Real Estate Writer with the Associated Press "Mortgage finance Giant Freddie Mac said Thursday that the average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week..." Yet many who would want to buy, cannot. They are just not able to qualify. Insufficient income, weak or shaky credit and a lack of required reserves (liquid assets) in the bank often elicit a negative response from lenders.
Reports are, however that the ongoing recession appears to be levelling off. With the G20 meeting in London as a backdrop it appears that some minimal policy successes were achieved for attacking the flagging world economy. Yet with contrary economic philosophies between the U.S. and Britain on the one hand and Continental Europe; led by France and Germany on the other, enactment of agreed upon policies will be predicated upon local (national) politics - not the photo ops.
Meanwhile, in the U.S. and across the globe Mortgages are difficult to acquire, Money is scarce and the Market is uncertain.
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