Average 30-year mortgage rate ticks up to 3.58%

Mortgage Rate Trend Index

No expert polled this week by Bankrate.com thinks rates will fall over the short term – but 70% foresee an increase, with the remaining 30% predicting little change.

WASHINGTON (AP) – May 19, 2016 – Long-term U.S. mortgage rates were little changed this week, at or near their lows for the year.

The low rates come amid the spring home buying season, luring prospective purchasers.

Mortgage buyer Freddie Mac says the average 30-year fixed-rate mortgage ticked up to 3.58 percent from 3.57 percent last week. It’s far below its level a year ago of 3.84 percent.

The average rate on 15-year fixed-rate mortgages was steady at 2.81 percent.

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The Catch-22 Facing Young Homebuyers

For Rent Three BHThe complex millennial generation stirs up a lot of talk in the mortgage industry, mostly because they have come to be known as the financially unstable and indecisive, renter generation in the housing market. While some of these labels do prove true, this generation is just mostly misunderstood, one analysis found.

The remnants of the housing crisis are making difficult for the 18- to 34-year-old cohort to break into homeownership, according to an in-depth analysis by USA TODAY‘s Hadley Malcolm.

“Young buyers are caught in a quandary. Owning a home has many benefits, including tax breaks and the potential to build value, plus mortgage payments are often lower than rent for a comparable home—especially over the long term,” Malcolm wrote. “But in some cities, rent can be so high that it’s difficult, if not impossible, to save the recommended 20 percent down payment.”

Down payments are one barrier that young buyers face in the housing market. According to Zillow data, analyzed by George Petras of USA TODAY, in Los Angeles/Long Beach, California, buyers would need to put 48.8 percent of their monthly income toward a rent payment, while only 39.9 percent of monthly income would go toward a mortgage payment. The same trend continues in other markets like San Francisco; Miami/Fort Lauderdale; and New York/N. New Jersey, where monthly rent payments outpace a monthly mortgage payment, but young buyers are often not able to save a down payment for a home.

“There are a lot of places to lay blame, and it’s not just high rents.”

USA Today

Malcolm noted that the “challenges presented by the current housing market to first-time buyers have put many on a prolonged path to the American dream.” Even more interesting is the fact that millennials most strongly associate the American Dream with homeownership compared to other generations but less than 10 percent of them actually plan to buy a home in the next year.

According to Zillow’s Housing Confidence Index, of millennials, 65.3 percent associate the American Dream with owning a home, but only 9.2 percent of them expect to purchase a home in the next year. Another 7.6 percent indicated that they are not sure about buying a home, while 1.8 percent said they never would.

“There are a lot of places to lay blame, and it’s not just high rents. Many point to crushing student debt loads. But the real culprits, say experts, are the housing crisis and the Great Recession, which forced many Americans into foreclosure,” Malcolm said. “Many who didn’t lose their homes found themselves with negative equity — owing more to their lender than a fair market price. This is commonly referred to as being underwater in a mortgage, and when homeowners feel like they are drowning, they tend to stay put. That leads to not enough affordable supply to meet the demand.”

Millennial homeownership rates are down to 34.2 percent as the first quarter of 2016 from 39.8 percent in 2009.

“Many young people have given up—at least for now. Homeownership rates among people under 35 are on the decline, and it’s not clear when that trend will reverse,” Malcolm penned.

Fitch: New-home sales should go up 14.6% this year

NEW YORK – May 12, 2016 – Steady order growth and strong backlogs should continue to support healthy financials for U.S. homebuilders for the remainder of the spring and beyond, according to Fitch Ratings. Potential impediments include a slowing U.S. economy, volatile financial markets, and labor issues relating to cost and an adequate supply.

“Low oil prices, generally healthy employment growth and pent-up demand should help support the housing upturn for at least the next few months,” says Robert Curran, managing director and lead homebuilding analyst.

Fitch projects that single-family starts will expand about 11.5 percent in 2016 and multifamily volume will gain about 4 percent. New home sales should improve about 14.6 percent, while existing home sales rise 3 percent.

Fitch expects the housing upcycle to continue in 2017. It projects single-family starts to improve 10 percent as multifamily volume grows 5.1 percent. Fitch also expects new and existing home sales to increase about 11.5 percent and 4 percent, respectively.

© 2016 Florida Realtors®

30-year fixed mortgage rates hit three-year low

Mortgage Rate Trend Index

Don’t expect changes in mortgage rates over the short term, say 3 out of 4 experts (73%) polled this week by Bankrate.com. Only 9% foresee an increase, however, while 18% predict further declines.

WASHINGTON (AP) – May 12, 2016 – Long-term U.S. mortgage rates fell this week for a third straight week, posting new lows for the year. The benchmark 30-year rate reached a three-year low.

The low rates come amid the spring home buying season, luring prospective purchasers.

Mortgage buyer Freddie Mac said Thursday the average 30-year fixed-rate mortgage dipped to 3.57 percent from 3.61 percent last week. It’s far below its level a year ago of 3.85 percent.

The average rate on 15-year fixed-rate mortgages eased to 2.81 percent from 2.86 percent last week.

Prices of U.S. government bonds have been at high levels since the Federal Reserve’s recent decision not to increase the benchmark interest rate – which it had raised from record lows in December. Some economists believe the Fed may not raise rates again until the second half of the year.

That means low levels for the bonds’ yields, which move in the opposite direction from their prices and tend to influence mortgage rates.

The yield on the 10-year Treasury bond stood at 1.73 percent Wednesday, down from 1.77 percent a week earlier. The yield rose to 1.75 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.5 point, down from 0.6 point last week. The fee for a 15-year loan was unchanged at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.78 percent this week, down from 2.80 percent last week. The fee was steady at 0.5 point.

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Late HOA Payments May Effect Credit Score Soon

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NEW YORK – May 10, 2016 – A major credit reporting agency says it will soon take into account homeowner association fees. Homeowners who are late on payments may see it affect their credit score.

Sperlonga, a credit data aggregator, is the first company to provide homeowner association (HOA) payment and account status data to Equifax, which is one of the three major credit-reporting agencies. A full rollout of the new HOA reporting to Equifax will go live in October.

Homeowner associations and property management companies collect about $70 billion in HOA payments yearly among at least 333,000 community associations, according to the Community Association Institute.

“Until now, HOA payments have gone largely unreported to the national credit-reporting agencies,” says Matt Martin, chairman and founder of Sperlonga. “Our service will help elevate association payments to the same level of importance as the consumer’s other financial obligations like residential mortgages, auto loans and credit card payments. Property owners that pay HOA fees on time should begin to see the similar impact [on] their credit reports as they would with other payment obligations traditionally found in a credit report.”

Property owners who are late or delinquent on HOA payments will likely see a negative effect on their credit score, just as if they had missed a mortgage payment.

“Introducing new sources of data beyond what has traditionally been found on credit files can provide additional insight into a consumer’s financial behavior and help deliver expanded credit access,” says Mike Gardner, senior vice president at Equifax.

Source: Sperlonga and “Your HOA Payments May Now Affect Your Credit Score,” Credit.com (May 4, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

Borrowers to Get a Boost from Distressed Loan Sales Changes

Foreclosure Two BHThe practices surrounding the government’s sales of deeply delinquent, non-performing loans (NPLs) have drawn considerable controversy in the last year or so. Lawmakers and advocacy groups have repeatedly petitioned the heads of housing regulatory agencies for changes to these programs that require them to sell the distressed mortgages to non-profits rather than private investors or equity firms.
In early March, a group of 45 members of the U.S. House of Representatives, led by Rep. Mike Capuano (D-Massachusetts), wrote a letter to FHFA Director Mel Watt and HUD Secretary Julián Castro calling for, among other changes, more transparency and the removal of “bad actors” from the NPL sales.
This week, FHFA announced enhancements to its NPL sales programs that include evaluating borrowers for eligibility for the new principal modification program announced this week.
“The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,” FHFA Director Melvin L. Watt said. “The Principal Reduction Modification program we are announcing today, along with the changes we are making to our NPL sales guidelines, will allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes.”
The enhancements to the NPL sales announced by the FHFA include the following:
Establishing that NPL buyers must evaluate borrowers whose MTMLTV (market-to-market loan-to-value) ratio exceeds 115 percent for modifications that include principal reduction and/or arrearage forgiveness;
Forbidding NPL buyers from unilaterally releasing liens and “walking away” from vacant properties; and
Establishing more specific proprietary loan modification standards for NPL buyers.
The enhancements may not be the changes the advocates and lawmakers were looking for, but they are still aimed at achieving the best borrower outcomes. Some believe there is more work to be done, however.
“FHFA has listened to the community, and is now putting a higher priority on principal reduction as a key strategy to get struggling homeowners into sustainable mortgage modifications.”
Amy Schur, Campaign Director, ACCE
“FHFA has listened to the community, and is now putting a higher priority on principal reduction as a key strategy to get struggling homeowners into sustainable mortgage modifications,” said Amy Schur, Campaign Director for the Alliance of Californians for Community Empowerment (ACCE), a group that organized a nationwide protest in February over Agency sales of NPLs to Wall Street. “However, it’s still the case that the majority of these mortgages are going to foreclosure, leaving more property in our neighborhoods in the hands of private equity firms and hedge funds, which is not what we need.”
The GSEs are including smaller pools of geographically-focused loans in their NPL sales targeted for participation from non-profits. Fannie Mae included one such Community Impact Pool in an NPL auction announced this week. It is the third Community Impact Pool offered for sale by Fannie Mae since it began selling NPLs last year; the first two were bought by non-profit New Jersey Community Capital.
The changes announced this week are the second set of enhancements that FHFA has announced to its NPL sales program. FHFA announced in March 2015 a set of enhanced guidelines for NPL buyers which call for bidders to, among other requirements, identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. Also, servicers who purchase non-performing Agency loans must apply a “waterfall of resolution tactics” before resorting to foreclosure.

Source http://www.dsnews.com

 

FHFA announces principal reduction program WASHINGTON – April 15, 2016 – The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes. FHFA says its new Principal Reduction Modification program is a one-time offer. Modification rules Loans must be owned or guaranteed by Fannie Mae or Freddie Mac Owner-occupant borrowers are those 90 days or more delinquent as of March 1, 2016 Mortgages must have an outstanding unpaid principal balance of $250,000 or less Mark-to-market loan-to-value (MTMLTV) ratios must exceed 115 percent Other eligibility criteria also applies FHFA thinks that about 33,000 borrowers will be eligible for a Principal Reduction Modification. Loan servicers must solicit borrowers eligible for a Principal Reduction Modification no later than Oct. 15, 2016. FHFA additional information Fact Sheet: Principal Reduction Modification Frequently Asked Questions: Principal Reduction Modification FHFA’s Analysis of a Principal Reduction Modification Program and Enhanced Non-Performing Loan Sales Requirements Fact Sheet: Enhanced Non-Performing Loan Sale Guidelines © 2016 Florida Realtors®

WASHINGTON – April 15, 2016 – The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes.

FHFA says its new Principal Reduction Modification program is a one-time offer.

Modification rules

  • Loans must be owned or guaranteed by Fannie Mae or Freddie Mac
  • Owner-occupant borrowers are those 90 days or more delinquent as of March 1, 2016
  • Mortgages must have an outstanding unpaid principal balance of $250,000 or less
  • Mark-to-market loan-to-value (MTMLTV) ratios must exceed 115 percent
  • Other eligibility criteria also applies

FHFA thinks that about 33,000 borrowers will be eligible for a Principal Reduction Modification. Loan servicers must solicit borrowers eligible for a Principal Reduction Modification no later than Oct. 15, 2016.

FHFA additional information

© 2016 Florida Realtors®