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Mortgage Rate Update Ending 8/19/2010

Bankrate.com  conducts a weekly national survey on the interest rates for the five most common consumer banking products.  Here’s the outcome for 8/19/2010:

• 30 Year Fixed Rate: 4.63 percent
• 30 Year Fixed Rate Jumbo: 5.26 percent
• 15 Year Fixed Rate: 4.11 percent
• 5/1 ARM (Adjustable): 3.95 percent
• 1 Year ARM (Adjustable): 4.80 percent 

According to the Mortgage Bankers Association:

• Mortgage applications rose 13 percent when compared to a week earlier
• Refinance applications shot up 17.1 percent when compared to a week earlier
• Applications for new purchases fell 3.4 percent

Are Loan Modification Success Stories Increasing or Decreasing?

At Loan Modification Advocates, we have seen a steady increase in our ability to push loan modifications through to success.  The Treasury Department recently came out with statistics that showed more than 299,000 homeowners received permanent loan modifications as of last month. That equates to around 25% of the 1.2 million homeowners who started the program since March 2009.  Without further information, one can perceive this news as either positive or negative.

From our experience, this number is just too low, and the time it takes to complete a loan modification is still shocking.  Clearly, there is not enough being done by the lenders to expedite the process of loan modifications. However, at Loan Modification Advocates, we are doing everything in our power to put you, the homeowner, in the best particular situation to obtain a loan modification.

When you become a client of Loan Modification Advocates, we perform a detailed analysis on your particular situation.  Our goal is to determine your likelihood of obtaining a loan modification based on our experience with past clients and our knowledge of the guidelines established by the lenders for determining whether a homeowner “qualifies” for a loan modification. Before turning in your file, we work with you to execute a strategy that maximizes the completeness of your file.  Once we believe your file is in the best shape possible, the file is turned in. One would assume that submitting a well-analyzed and guideline-specific file would result in a fast and efficient turnaround by the lender.  Unfortunately, in some situations that is not the case.

Here are some of the scenarios Read more

Mortgage Rate Update Ending 05/06/10

Bankrate.com conducts a weekly national survey on the interest rates for the five most common consumer banking products.  Here’s this week’s outcome:

• 30 Year Fixed Rate: 5.12 percent
• 30 Year Fixed Rate Jumbo: 5.94 percent
• 15 Year Fixed Rate: 4.49 percent
• 5/1 ARM (Adjustable): 4.31 percent
• 1 Year ARM (Adjustable): 4.91 percent 

Mortgage applications rose.

Applications for new purchases jumped.

Refinancing activity slipped.

Pending home sales rose.

Foreclosure or Short Sale Complete? Think Again.

At Loan Mitigation Advocates we take pride in trying to help our clients preserve their home ownership.  Loan modification is the preferred method to resolving a homeowner’s hardship.  However, there are times when someone’s situation cannot be resolved through loan modification and the only possible solution may be to short sale or foreclose on the property.

Short sales and foreclosures are happening due to the combination of falling home prices and a borrower’s unforeseen circumstances (ie unemployment, reduction of hours, medical condition, etc,). Borrowers who can’t obtain a loan modification and are having difficulty maintaining their payments have to sell their homes for what they owe. As a result, they are being forced to short sell or foreclose.  Unfortunately, these homeowners who head down the path of short sale or foreclosure are unfamiliar with the pitfalls that may follow.  Besides credit implications, possible deficiency judgments could occur long after the homeowner has concluded their transaction.

In a recent article, Les Christie describes two scenarios where homeowners were forced into involuntary homeowner monetary contributions after the completion of their transaction – one related to short sales and the other related to foreclosure. We recommend that you read this entire article by clicking on the link above to further understand these potential consequences. 

Also, to get further educated on your particular situation you can contact Greg Jewell at 925.463.6164.  Greg specializes in short sale coordination and has direct experience with numerous short sale transactions.  Contacting a real estate attorney, bankruptcy attorney or a tax consultant is also important to clearly understand the types of loans you have – recourse vs. non-recourse and the possible implications involved.

Mortgage Rate Update Ending 01/20/10

Bankrate.com conducts a weekly national survey on the interest rates for the five most common consumer banking products.  Here’s this week’s outcome:

• 30 Year Fixed Rate: 5.15 percent
• 30 Year Fixed Rate Jumbo: 5.93 percent
• 15 Year Fixed Rate: 4.56 percent
• 5/1 ARM (Adjustable): 4.63 percent
• 1 Year ARM (Adjustable): 4.92 percent 

Mortgage applications rose compared to a week earlier, according to the Mortgage Bankers Association.

Refinancing activity surged and applications for new home purchases increased.

Mortgage Industry to Receive Pressure from the Obama Administration

The government is not happy with the results from its foreclosure-prevention efforts.  Mortgage companies are not doing enough to help homeowners avoid losing their homes.  The Obama administration has vowed to spend the next several weeks to increase the pressure on the mortgage industry.

In a recent Associated Press article on this matter, Treasury Department officials said they will step up pressure on all the companies participating in the government’s $75 billion effort to stem the foreclosure crisis. At Loan Mitigation Advocates, we feel that it is about time. Despite having completed numerous successful loan modifications, we have been frustrated at the inability of lenders to turn around loan modifications in an effective and efficient manner.  Unfortunately, we don’t see this changing unless the lenders are more heavily scrutinized for their lack of effort and thus held accountable with direct consequences.

To turn the lenders around, it appears the government will start by sending a three person team to monitor the eight largest companies’ work and then that team will send twice-daily reports on their progress. Also, the Treasury Department will publish a list of the mortgage companies that are lagging.

“In our judgment, servicers to date have not done a good enough job” of making the modifications permanent, said Michael Barr, an assistant Treasury secretary. Companies, he said, “that don’t meet their obligations under the program are going to suffer consequences.”

Home Sales to be Tested this Winter

Despite recent figures showing that house prices have increased for the last three months, concerns for this winter are starting to appear that housing may be in for a deep freeze. Three main factors are at the focal point of the debate: the tax credit expiration, default and distress sales and artificially low interest rates.  One or a combination of the three could slow down home sales and shift home prices downward.

In the Tri-Valley of Northern California, the area that Loan Mitigation Advocates has our headquarters, default and distress properties have been waning. The last few months have seen less foreclosure and short sale properties come on to the market.  Six months to over a year ago, these default and distressed homes where primarily found in the lower to middle price ranges. Many of the homeowners in this price range had secured subprime mortgages which later resulted in big problems and consequently led to foreclosures and short sales. Now, things are beginning to shift away from the lower to middle priced homes.  More homes at the middle to upper price ranges are expected to become default and distress sales according to a recent New York Times article.  “Plenty of pain yet to come,” said Joseph Shapiro, chief United States economist for MFR.

At Loan Mitigation Advocates, we are always trying to stay abreast of current market trends.  In talking to homeowners, we have identified that some homeowners at the higher price points have been more equipped financially to survive the downturn in the market.  Despite job losses or reduction in income, they have been able to live off savings or the liquidation of stock for a longer period of time.  Some have been able to adjust their lifestyle while others have found jobs to replace lost income. However, for those who have not been able to overcome their hardship, they are faced with the grim reality that their life savings is being wiped out.  They may be left with no choice but to consider giving up their home to short sale or foreclosure.

On top of the potential for more default and distressed sales, another factor that could weigh in on home sales is a rise in Read more

Focus your attention on CREDIT

Credit has been making headlines recently and is quite a serious subject.  With many homes turning to short sales and foreclosures, some homeowners don’t realize the huge impact that a short sale or foreclosure can have on their credit and subsequently their future buying power.

In a recent article by Strategic Equity, Dave Muti, author of “Mortgages:  What You Need to Know,” was asked how a credit score is calculated and tips for increasing it. The Fair Isaac Corporation created the most common credit score used today – the FICO score.  It ranges between 350 and 850.  The higher the score, the better the interest rate you can secure.  720 is the credit score threshold that you don’t want to drop below in order to secure the best rates.  If you drop below 500, you may not even be able to secure a mortgage.

The following are five critical credit criteria reported in the article:

1. Payment History – This pertains to your track record for paying your bills. It makes up 35% of your score. Essentially, this means paying your bills on time. A mortgage “late” is much more serious than a credit card “late”
2. Credit Ratio – How much you owe is 30% of your score. Just because you owe less does not translate to having a better score.  This score is determined between the various types of credit you have opened (see #3 below). There needs to be a balance between how much you owe and how much you have available to you.  Having too many credit cards can be a negative and having only one could be as well. The goal is to have a lot of credit available to you, and to then use that credit, while at the same time not maintaining a high balance.
3. Credit Type – The type of accounts you have makes up Read more

Is the Housing Market Set for a Rebound?

Some experts argue that the worst is behind us and others are predicting the worst is yet to come.

Here are a few recent reasons in support of a market recovery:

New Home Builds

• Based on a government report, new home building increased in August.  The Census Bureau reported that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July.
• Building permits rose 2.7% to 579,000.
• The National Association of Home Builders reported their index of homebuilder confidence had risen a point to 19, its highest level since May 2008.

Resale Homes

At Loan Mitigation Advocates, part of our job is to stay abreast of trends in the real estate market.  We pay particular attention to inventory numbers and the ratio of normal sales to REO/short sale transactions.  In our local area of Northern California, inventory numbers are reaching staggering low numbers in some areas.  There have been cases of multiple offers and homes selling for more than their asking price.  We have also noticed less foreclosures and short sales coming on to the real estate market over the past few months.

On the flip side, there are some potential pitfalls in the near future that could put a damper on the recovery:

Recasting Loans, Foreclosures and Short Sales

According to CNNMoney.com, a large number of non-conventional mortgage loans, including interest-only mortgages and option ARMS, will reset over the next year or so. These resets will lead to increases in the monthly mortgage payments for homeowners. Many people will not be able to afford the increases.

The interest-only loans specifically pose a large threat.  These are homeowners who are paying only the interest payment for a fixed number of months.  Once the number of fixed months is up, the payment is based on principal and a new interest rate, resulting in a much higher payment in most cases.  There were a number of these type of loans created back in 2005 that are set to recast in 2010.

Besides the threat of interest-only loans, option ARMs could create problems as well.  The option ARM loan has provided a borrower the ability to Read more

Mortgage Rate Update Ending 08/19/09

Bankrate.com conducts a weekly national survey on the interest rates for the five most common consumer banking products.  Here’s this week’s outcome:

• 30 Year Fixed Rate: 5.52 percent
• 30 Year Fixed Rate Jumbo: 6.44 percent
• 15 Year Fixed Rate: 4.84 percent
• 5/1 ARM (Adjustable): 4.86 percent
• 1 Year ARM (Adjustable): 5.19 percent 

Mortgage applications were higher for the week for new purchases and resale.  Refinancing activity also rose, according to the Mortgage Bankers Association.

According to RealtyTrac, foreclosure activity was up 7 percent during July. One in every 355 U.S. housing units received a foreclosure notice during the month.

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