In Time for Buying Season, Rates Reach Yearly Lows

The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “30-Year Fixed-Rate Mortgage Matches Yearly Low of 4.71 Percent,” Freddie Mac (May 5, 2011)

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Washington State HomePath Buyer Incentive Offer

There’s great news from Fannie Mae: Buyers may be eligible to receive up to 3.5% in closing cost assistance through June 30, 2011 as part of the HomePath buyer incentive.

To be eligible for this incentive, the following qualifications must be met:

  1. Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible.
  2. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
  3. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
  4. Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
  5. Buyers must sign an Owner Occupant Certification Rider to the real estate purchase addendum.
  6. If the buyer’s total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Keep in mind that offers submitted after May 15, 2011 may be difficult to close by the June 30, 2011 deadline. In addition, in California and Washington, there is also a $1,000 buyer’s agent incentive.

Contact me for specific details on this incentive offer and for all of your Fannie Mae HomePath financing questions. I’m always happy to help you in any way I can!

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Contracts for home sales rose 5.1% in March; mortgage rates drop

WASHINGTON — More Americans signed contracts to buy homes in March, but sales were uneven across the country and were not strong enough to signal a rebound in housing.

Sales agreements for homes rose 5.1% last month to a reading of 94.1, according to the National Association of Realtors’ pending home sales index, released Thursday.

Signings are more than 20% above June, the low point of the housing bust. But the index is below 100, which is considered a healthy level.

Sales rose in every region but the Northeast.

Source: By AP, USA Today (April 29th, 2010)

Banks Rush to Revamp Foreclosure Rules

The rush is on for banks to meet a mid-June deadline in offering up plans on how they plan to meet a set of guidelines by U.S. regulators to clean up their foreclosure procedures. The banks will have another 60 days after that deadline to implement the changes.

As part of the rules set by U.S. regulators, 14 financial institutions will be required to provide a single point of contact to borrowers trying to modify a loan or in the foreclosure process as well as set “appropriate deadlines” for deciding whether borrowers can get a loan workout. Regulators are also requiring banks to ensure their staffing levels are on par to handle the flood of foreclosures and loan modifications.

Several banks have already taken steps to implement the changes.

For example, J.P. Morgan says it’s developing a software program to make it easier for employees and borrowers to track loan modification requests. It also has started providing borrowers with a “relationship manager” to help navigate the loan modification or foreclosure process.

Citigroup, which already provides a single point of contact, says in the next few months it’ll debut a “concierge” system that will provide a small team of employees to guide delinquent borrowers and home owners at risk of default.

Banks are also making efforts to speed up their loan modifications, after customers have complained of long delays from banks in responding to requests. For example, Los Angeles Neighborhood Housing Services says it takes an average of 141 days for its borrowers to get an answer on an initial loan modification request. Wells Fargo was found to have the fastest turnaround: Initial reviews averaged 79 days. But the bank says now 60 percent of its borrowers receive a decision five days after the company receives the request.

Banks are also increasing their staffing. J.P. Morgan has announced it’ll add up to 3,000 new home-lending jobs, and Bank of America plans to hire about 3,000 employees to focus on its troubled mortgages.

New Incentives From Fannie, Freddie

Banks and mortgage servicers also must meet new guidelines from Fannie Mae and Freddie Mac, announced this week, that aim for more loan modifications and prevent foreclosures from taking too long.

Mortgage servicers will be required to approach borrowers earlier, making contact frequently after just one missed payment.

The GSEs are also offering incentives: They’ll pay $1,600 in incentives depending on how quickly servicers complete a loan workout. They also will impose a $500 compensatory fee on servicers who do not complete loan modification applications within six months after the loan goes delinquent. The changes will go into effect in the second quarter.

Source: “Banks Rush to Improve Foreclosure Practices,” The Wall Street Journal (April 29, 2011)

Foreclosure Activity Drops to 3-Year Lows

New data released from RealtyTrac on Thursday show the foreclosure crisis is easing: Foreclosure notices filed during the first three months of 2011 dropped 27 percent compared with the first quarter of 2010. More than 681,000 homes received a foreclosure filing during the first quarter of 2011.

And while 215,046 borrowers lost their homes, that marks a 17 percent decrease year-over-year.

However, while the improvement may be encouraging, experts warn that the decrease in foreclosure activity is likely temporary.

“The nation’s housing market continued to languish in the first quarter, even as foreclosure activity fell to a three-year low,” says James Saccacio, RealtyTrac’s CEO. “Weak demand, declining home prices, and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork.”

Following this fall’s “robo-signing” scandal, in which banks were accused of processing foreclosures without proper reviews, banks have slowed their pace of foreclosures until they clean up their paperwork procedures, experts say. Otherwise, the number of foreclosures would be much higher for the quarter, says RealtyTrac spokesman Rick Sharga.

Meanwhile, Nevada continues to post the highest rate of foreclosure activity, followed by Arizona and California. Nevada alone had 32,000 properties, or one in every 35, receiving a foreclosure filing.

Source: “Foreclosures Off 30% This Year,” CNNMoney.com (April 14, 2011) and “Processing Delays Cut Foreclosure Activity by 27% in 1Q 2011: RealtyTrac,” HousingWire (April 14, 2011)

Homeowners facing foreclosure about to win right to mediation

More homeowners in Washington state could get help avoiding unnecessary foreclosures under a bill awaiting Gov. Chris Gregoire’s signature.

The bill, the “Foreclosure Fairness Act,” would give distressed homeowners working with housing counselors or attorneys the right to in-person mediation with the bank or company servicing their mortgage. Consumer advocates expect Gregoire to sign the bill Thursday.

Washington, among the 27 states where court approval of foreclosures isn’t required, would become only the third state — after Nevada and Maryland — to adopt a foreclosure-mediation program in which a homeowner can seek to modify terms of their loan.

“There’s no silver bullet, but this will at least be a competent response to the irresponsibility of the financial industry,” said Bruce Neas, a Columbia Legal Services attorney who helped negotiate the bill.

State regulators, who receive hundreds of complaints each year against national mortgage servicers, have been stymied by federal rules that limit their power to intervene.

The only recourse for homeowners has been going to court, where they’re usually outmatched by servicers.

Also Wednesday, federal regulators announced they had ordered eight national banks — Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo — to hire an outside firm to review all foreclosure actions from 2009 to 2010 and submit a plan to remedy “all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies” identified by outside consultants.

The move by state lawmakers to require mediation comes as the foreclosure crisis in Washington continues. In the first three months of the year, more than 5,600 homes were seized and more than 7,000 were headed to foreclosure auction, according to RealtyTrac.

The bill before Gregoire also would provide an estimated $7.5 million for foreclosure-prevention efforts and more than double the number of housing counselors. Washington has just over 40.

“The real hope is that by adding the counselors, the banks and families would reach some kind of agreement before going to mediation,” said Kim Herman, executive director of the Washington State Housing Finance Commission.

Under the proposed law, once a homeowner becomes delinquent, the servicer must send a letter asking the owner to contact the server and urging the person to call a housing counselor or attorney for help.

Homeowners who respond to the letter would be given 60 more days before the servicer could file a notice of default.

If the counselor or attorney couldn’t resolve the issue with the servicer, they could refer the homeowner to a mediator through the state Department of Commerce.

The Commerce Department selects the mediator, who must hold a session within 45 days. The homeowner and servicer share in the cost of the mediator’s fee, which can be up to $400.

If the mediator finds the servicer didn’t participate in good faith, a homeowner can use that to ask a court to stop the foreclosure. The state Attorney General’s Office also could pursue penalties against servicers.

When lawmakers opened negotiations on the bill, consumer advocates were surprised by the bankers’ first move.

Without prompting, the Washington Bankers Association offered to pay a $250 fee for every default notice filed, with the stipulation that 80 percent of the money pay for housing counselors.

“It did surprise people,” Herman said.

The association, which represents national and community banks, suggested the fee because it wants more delinquent homeowners to work with housing counselors, said James Pishue, the group’s president.

National studies show that homeowners who work with trained housing counselors have much higher success rates in reaching an agreement with their servicer.

“We thought that would prevent the need for mediation,” Pishue said. “Ultimately it results in fewer foreclosures.”

Marc Cote, a housing counselor who oversees the state’s foreclosure-prevention hotline, said he’s pleased with the measure.

“The main thing I’m hopeful for is that the mediation piece will inspire servicers to resolve the hundreds, in my experience, of [loan] workouts that are still not resolved after months and months.”

Source: Sanjay Bhatt, Seattle Times (April 13th, 2011)

Fannie Offers Closing Cost Help for REOs

Fannie Mae is trying to lure more buyers to its foreclosure properties by offering to cover 3.5 percent in closing costs for home owners who close by June 30 on its HomePath properties.

Fannie’s HomePath program provides low down payment financing on REO property sales and has no requirements for mortgage insurance or appraisals.

During the fourth quarter of last year, Fannie offered closing cost assistance and was able to recoup 55 percent of unpaid principal balance on defaulted mortgages through the sales.

Source: “To Move REO, Fannie Offers Deals to Consumers,” National Mortgage News (April 12, 2011)