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Mortgage Rates Close to ‘Bottoming,’ Koskinen Says (Update2)
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By Kim Chipman and Romaine Bostick

March 27 (Bloomberg) -- Mortgage rates are “probably as good as it’s going to get” and the housing market is likely to rebound sooner than some forecasts, Freddie Mac interim Chief Executive Officer John A. Koskinen said.

“Mortgage rates, if they go down at all further, it’s going to be incremental,” Koskinen told reporters today in Washington after he met with President Barack Obama. “Interest rates are probably close to bottoming out, and therefore we are telling people” to buy a house now.

The U.S. 30-year fixed mortgage rate as tracked by Freddie Mac fell to 4.85 percent, the lowest on record, on a government plan to increase purchases of mortgage bonds. The U.S. housing market, the worst since the Great Depression, may improve sooner than some economists’ forecasts as people who had put off home purchases take advantage of a “buyer’s market.”

“This is more attractive than they’ve ever been and about as attractive as they’re ever going to be,” Koskinen said of mortgage rates. ‘We are going to begin to see a lot of home purchases by people on the sidelines who are suddenly discovering ‘hey I can afford a house.’”

Read the entire<a href="http://www.JeffDrew.StarMortgage.com"> Mortgage rate</a> article here:

Mortgage rates at 52-year low

The average 30-year fixed mortgage rate dips to 5.19%, according to a report from Bankrate.com, the lowest rate since 1956.
By Catherine Clifford, CNNMoney.com staff writer
Last Updated: March 26, 2009: 2:38 PM ET
NEW YORK (CNNMoney.com) -- Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt.
The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey.
The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com.
To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.
Meanwhile, the average 15-year fixed mortgage rate fell to 4.80% from 4.86% in the the prior week. The 15-year fixed mortgage rate carried an average of 0.49 points.
The government announced last week that it would be buying more than $1 trillion in debt in order to increase liquidity and improve credit conditions. With the key lending rate already at a range of 0% to 0.25%, the Federal Open Market Committee - the policymaking committee of the Fed that sets interest rates - turned to less traditional means to encourage lending.
The Federal Reserve said that it would buy an additional $750 billion in mortgage-backed securities and $300 billion of long-term Treasurys. The so called "quantitative easing" policy essentially increases the money supply and is designed to push interest rates down, making borrowing cheaper.
Not much further to drop: Analysts say that while mortgage rates could edge a smidgen lower, they won't make any more dramatic plunges.
"At this point, what we are going to see is mortgage rates fluctuate at these levels," said Brian Bethune, chief financial analyst at IHS Global Insight. "I don't see them dropping significantly from where they are now."
Mortgage rates move in relation to the yield on the 10-year government bond. While there is not a direct correlation, they do move in the same direction. Bethune said that there are two factors that will prevent Treasury yields, and by extension mortgage rates, from dropping much further.
"One is the huge Treasury borrowing requirements," he said. As the government looks to fund its massive stimulus spending programs, it has had to issue a record amount of debt. The increased supply keeps a lid on the price of bonds and stabilizes yields.
"In addition, as we get closer to perceptions of a trough in the economy, the yields will tend to see upward pressure," said Bethune. Uncle Sam's debt is considered one of the safest places for investors to keep their cash. During times of market uncertainty, demand surges, the prices increase, and yields fall. But as market sentiment begins to believe the economy could be headed for recovery, demand for Treasurys will lessen, lifting yields.
Surge in refinance: The dramatic drop in mortgage rates has motivated home owners to refinance in great numbers, but the drop in mortgage rates has not spurred as large an increase in new home purchases, said Mike Larson, real estate analyst at Weiss Research.
"We are still not seeing a huge impact on home buying," he said. "All else being equal, it will help the market," said Larson. "But it is not the huge impact you are seeing on the refinance side."
Bankrate.com compiles national averages every Wednesday by surveying the top 10 banks and thrifts in the top 10 housing markets. For historical data, Bankrate.com cites the National Bureau of Economic Research.
First Published: March 26, 2009: 12:25 PM ET


Find this article at:
http://money.cnn.com/2009/03/26/real_estate/mortgage_rates/index.htm?section=money_latest

* Please note that if you have a Massachusetts mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.

Part of the Homeowner Affordability and Stability Plan is a mortgage refinance program for existing Fannie Mae or Freddie Mac loans. Fannie Mae is offering two different programs:

1. The Refi Plus Program that requires the servicer of the loan to be the originating lender.
2. The DU Refi Plus Program (DU is the Automated Underwriting System for Fannie Mae) that allows any lender/broker using DU to originate the loan as long as the existing loan is a Fannie Mae loan. In my opinion this is the best scenario as I am able to shop multiple lenders to find you the lowest rate as opposed to just the rate the current lender is willing to offer. This is one of the main reasons and benefits of working with a mortgage broker.

Some specifics of the program are:

• Existing mortgage must currently be a Fannie or Freddie loan.
• Existing loan may not be considered ineligible (must get an Approved/Eligible from DU). Ineligible loans include existing mortgage loans that received a DU Expanded approval (EA).
• The new loan must be a fixed rate mortgage.
• Maximum LTV for 1-2 unit properties is 105% and require an appraisal.
• Maximum LTV for 3-4 unit properties is 80% and also require an appraisal.
• No maximum CLTV.
• Existing mortgage must be current and have acceptable mortgage payment history. No minimum FICO score is required although borrower must meet bankruptcy and foreclosure requirements. In addition, borrower must demonstrate credit worthiness.
• Rate and term refinance only (No Cash Out) - purchase money seconds MAY Not be included.
• Loan level price adjustments (points) will apply (determined by credit score on credit report)
• MI required (same coverage factor of existing loan) for mortgage loans that had original LTV’s greater than 80%. If you did not have mortgage insurance you would not have it on the new loan.
• DU Refi Plus must receive Approve/Eligible and will not be available until April 4. Income and employment verification is still required. The broker and lender must determine that the borrower has a reasonable ability to repay the mortgage.

- Freddie Mac, at this time, requires the servicer of the loan to be the originating lender.

There are still many portions of the program details still to be determined. The lenders still have to determine if they will be participating and how they plan to do so. I am feel confidant this plan will actually help those who have good credit and some equity in their home.

If you would like me to assist you with determining if your home loan is owned by Fannie Mae or Freddie Mac please give me a call at: 800-941-5616.

I will continue to provide you with updates as they become available.

Daily Mortgage Interest Rate Updates for Massachusetts

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Massachusetts Mortgage Loans and Rates

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Massachusetts Mortgage Loans

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Massachusetts Refinance Mortgage Loans

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Massachusetts Mortgage Advice

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Special Report
Updated Housing Plan

03/04/2009

Today the Treasury Department released the details and guidelines of the Obama Administration’s Housing Plan which is being called “Making Home Affordable”

The following links will provide you with direct access to read the Treasury Department’s release:

Click here for the summary

Click here for the Housing Fact Sheet

Click here for Modification Guidelines

Obama administration launches housing plan
Wednesday March 4, 10:01 am ET
By Alan Zibel, AP Real Estate Writer

Gov't provides details, sets standards for housing plan aimed at helping 9 million borrowers

WASHINGTON (AP) -- The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.

The Treasury Department released detailed guidelines designed to let the lending industry know how to enroll borrowers in the program announced last month.

"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said in a statement.

The administration, launching what it calls the "Making Home Affordable" initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the $75 billion loan modification program, which runs through 2012.

Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Mortgages for single-family properties that are worth more than $729,750 are excluded.

Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

Meanwhile action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.

House Democrats, under pressure from a group of moderates in their ranks and the banking lobby, agreed Tuesday to narrow legislation that gives bankruptcy judges the power to force lenders to lower the interest rate or principal.

of mortgages for troubled homeowners.

Under the terms of the agreement, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.

The compromise legislation was expected to come to a vote in the House as early as Thursday.

http://www.FinancialStability.gov.

I saw this article on Bloomberg on the topic of Mortgage interest rates and wanted to share with my Massachusetts borrowers.

Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens


By James Sterngold

Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.

The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.
“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”

Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.
The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.

‘Too Tight’

“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”

Help may be on the way. Under the terms of President Barack Obama’s housing plan announced Feb. 18, as many as 4 million homeowners on the verge of foreclosure will be eligible to have their loans modified to reduce monthly payments. Another 5 million, whose homes are worth less than the principal of their mortgages, also may be able to refinance

The program, which takes effect March 4, only covers borrowers whose mortgages are owned or insured by Washington- based Fannie Mae or Freddie Mac -- about 40 percent of the total, according to Inside Mortgage Finance, a Bethesda, Maryland-based newsletter. They must still prove they have a solid payment history and sufficient income to meet monthly payments, and the loan can’t be more than 105 percent of the appraised value of the home to qualify.

FICO Scores

Those not covered by the Obama plan will have to contend with lenders requiring higher FICO scores than in the past or charging upfront fees to borrowers with scores once considered excellent. San Francisco-based Wells Fargo & Co., the second- largest U.S. home lender, boosted the minimum score for Federal Housing Administration and Veteran Affairs loans it makes through brokers to 620 on Jan. 27 from 600.

“A score of 700 was once near perfect,” said Gwen Muse Evans, vice president of credit policy at Fannie Mae, the government-controlled company that helps set lending standards. “Today, a 700 performs more like a 660 did. We have updated our policy to take into account the drift in credit scores.”

Consumer credit scores, called FICOs after creator Fair Isaac Corp., range from 300 to 850. The average FICO score on mortgages bought by Freddie Mac and Fannie Mae rose to 747.5 in the fourth quarter of last year from 722.3 in 2005, according to Inside Mortgage Finance.

Higher Fees

Accunet’s Wickert said that a 660 FICO score would have qualified most borrowers for loans with no upfront fees in the past. Now, someone trying to borrow $200,000 with a 660 score would have to pay a 2.8 percent fee, or $5,600, he said. Even someone with a 719 score would have to pay $1,750 in cash.

Wickert said that if customers don’t want to pay the fees in cash, he can increase the interest rate, since the wholesale banks he sells his mortgages to would pay more for the higher rate over the life of the loan. Before the crisis, a quarter-of- a-percentage-point increase in the rate was sufficient to cover a 1 percent fee. Now, Wickert said, he needs to double that.

Robert Satnick, a mortgage broker in California’s San Fernando Valley, said he has a customer whose efforts to refinance a loan at a lower rate might cost her about $600 a month more because the value of her condominium has declined.

The owner has good income and a FICO score in the high 700s, he said. The dilemma is that the value of her home has dropped to about $400,000, the amount of her mortgage. As a result, banks will charge her an upfront fee of 1.75 percent on a 6 percent refinancing. She also has to buy private mortgage insurance, adding another $63 a month to her cost.

Out of Reach’

“This is now a great opportunity to buy or refinance,” said Satnick, 44. “But getting the mortgage has gotten so hard it’s putting those properties out of reach of a lot of people.”

Another strain on consumers is a planned increase by Fannie Mae of add-on fees called loan-level price adjustments, which lenders often pass on to borrowers. Someone with a 699 FICO score borrowing 80 percent of the value of a home used to pay 1 percent in price adjustments. As of April 1, Fannie Mae will raise that to 1.5 percent. For a borrower with a 659 score, the adjustment will climb to 3 percent from 2.25 percent.

“These are targeted pricing adjustments aimed at aligning price with risk for the highest risk products in the market today, including interest-only loans, cash-out refinancings, low credit scores, high loan-to-value loans and condos,” said Fannie Mae spokeswoman Amy Bonitatibus.

Staff Reductions

Another issue is that mortgage lenders have eliminated jobs, slowing down the approval process.

“We’re very thinly staffed because we don’t know how long this will last,” said Christopher M. George, president of CMG Mortgage in San Ramon, California, referring to the global financial crisis.

George said he has gone from almost 800 employees in 2006 to 250. Nationwide, employment in the mortgage industry declined to 280,000 in December from 505,000 at the peak in February 2006, according to data compiled by the Mortgage Bankers Association in Washington.

Even with a smaller staff, George said, his underwriters do more checking than in the past. Before the crisis, he said, CMG asked borrowers to fill out an Internal Revenue Service form that allowed the lender to confirm income information, though it rarely sent the form to the IRS. Now, George said, CMG sends the form in before the closing, scrutinizes appraisals and contacts banks to check on the account balances of the borrowers.

“Everything is checked, and that makes it harder for some people,” he said.

Refinancing Program

Fannie Mae, taken over by the government in September after losses on its mortgage holdings, says it is doing what it can to help borrowers and is urging mortgage bankers to do the same.

A new program called DU Refi Plus that takes effect April 4 is intended to make it easier for consumers to refinance their mortgages, even if the value of their homes has declined. Lower FICO scores will be accepted, the requirement for an appraisal or home inspection will be waived in some cases, and borrowers will be able to submit a single pay stub to confirm their salaries rather than more extensive documentation.

Fannie Mae says it still won’t be easy to make low mortgage rates more accessible.

“There needs to be some creativity to get back into the marketplace and get through this fear,” said Fannie Mae’s Evans. “The message we’re trying to promote is we can’t be afraid to lend. We want to get back to the mentality of looking at prudent ways to say ‘Yes.’”

Wickert, whose mortgage-approval rate has declined to 93 percent from 98 percent a year ago, said the issue requires a flexibility that only a few lenders are showing. The customer who was rejected by three banks got her mortgage approved by a fourth, which focused on her high income and credit score, not the appraisal rule, he said, adding weeks to the process.

“A lot of people are frustrated because the rates look good, but someone has raised the bar on them,” Wickert said.

To contact the reporter on this story: James Sterngold in Los Angeles at jsterngold2@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601213&sid=a8ta_MEhUZ9E&refer=home

Call me to review these details and how they may impact you with your next Massachusetts Mortgage Loan.