Around 15.5 percent of the homeowners who applied for the program have managed to lock in permanent adjustments up from 11.5 percent a month earlier. Still, more than 835,000 homeowners are still lingering under temporary modifications. The program requires a trial period wherein homeowners are checked if they are able to make the reduced payments. This is also a time where banks gather documented and verified paperwork which establishes grounds for granting permanent modification.

The program allows troubled homeowners to reduce monthly mortgage payments by setting a ceiling on how much payment they make or around 31 percent of their pre-tax income. Industry numbers also show that the average mortgage modification reduces a homeowner’s mortgage payment by $500 or 36 percent.

However, qualifying for the trial program does not necessarily equate to long term modification. More than 90,000 homeowners have been approved for modification and are just waiting for the loan services approval. An equal number of those who applied or nearly 88,000 homeowners however have been denied because of failure to meet one of the criteria. Another 1,500 homeowners who had previously qualified for permanent modification have seen their new loans terminated.

The increase in numbers has only been due to government efforts of pressing banks into speeding up the process. Although the paces at which trial programs are being processed have been improving in the previous months, majority of homeowners still find themselves under temporary modification.

The government mortgage refinancing program was aimed at helping the million of homeowners in danger of losing their homes. However, months into the program, it has only reached a fraction of those it was originally meant for.

Reported by REOProteams

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Other mortgage rates were also slightly up this week as 15 Yr FRM was at 4.33 percent a bit higher than the 4.32 percent a week earlier. 5 Yr ARMs also ticked higher, reports show rates stood at 4.09 percent up from the previous week’s 4.05 percent.

This, as some of the federal programs which have been responsible for keeping mortgage rates low are scheduled to end. Large amounts of government money have been pumped in to buy mortgage back securities in an effort to keep mortgage rates low and spur home buying.

December of last year saw mortgage rates drop to 4.71 percent the lowest since weekly reports were started. But the Federal Reserve’s program is slated to end at the end of this month raising fears that mortgage rates might spiral upwards after the program’s demise.

Rates have been hovering at the 5 percent levels ever since the fed pumped in trillions of dollars to buy MBS. Scheduled to end March 31 of this year, many analysts fear that rates could rise again. Some economists believe that mortgage rates are being kept artificially low and that gains in the housing sector could be compromised once some of the government programs end.

The government has been responsible for buying huge chunks of mortgage back securities and with the programs slated end, economist fear that the market may not be able to pick things up once the fed has left. But the Fed had signaled its intention to keep a close watch over things and keep its options open once mortgage rates start to begin their upward spiral.

Reported by REOProteams

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Filed under: News, Real Estate News Tagged: Bargain Homes, Bargain Properties, Mortgage, Mortgage rates, Real Estate, Real Estate News ]]> http://sweetbargaindeals.com/2010/03/19/mortgage-rates-remain-below-5/feed/ 0 reoproteams mortgage2 http://sweetbargaindeals.com/2010/03/18/bad-weather-foreclosures-dampens-home-builder-confidence/ http://sweetbargaindeals.com/2010/03/18/bad-weather-foreclosures-dampens-home-builder-confidence/#comments Thu, 18 Mar 2010 09:05:16 +0000 reoproteams http://sweetbargaindeals.com/?p=976 ]]> It seems that some of the worst weather conditions being experienced in parts of country these past few months have not only put a chill into the homes of homeowners but has also placed a dent in home builder sentiment.

Bad weather have left prospective homebuyers knee deep in snow and too busy keeping themselves warm to go out and shop for a new home. The rising number of foreclosures has also left homebuilders facing fierce competition from previously owned homes. With some of these homes being sold at a fraction of their original values homebuyers have been scrambling to purchase these properties.

“The continual flow of distressed properties priced below the cost of production is having an adverse effect on new-home appraisals and also making it tough for builders’ customers to sell their existing homes,” said NAHB Chairman Bob Jones.

With the tide of foreclosures swamping the market with bargain priced homes, homebuilders are facing a hard time competing for home sales. Sales of previously owned homes still outnumber the numbers of newly built homes.

According to a report released by the National Association of Homebuilders this Monday, the housing market index this month dropped 2 points returning to January levels. The market index stood at 15 points, this report reflects the general sentiment of home builders in the country.

Figures below 50 points show a pessimistic outlook in the housing market. The market index has generally been below the 50 point market since the start of the real estate crisis. Homebuilder confidence last stood above the 50 point level on April of 2006.

Sales of newly built homes have stumbled the previous months. January posted the third consecutive drop in newly built home sales, dipping by 11 percent. Previously owned homesales didn’t do as good either as they dipped by 7 percent.

The cold months have been traditionally slow months for home sales. This gives homebuilders a glimmer of hope as home sales usually pickup during the spring. With the tax credit program extended till spring of this year, this and low mortgage rates might just be answer homebuilders are looking for.

Reported by REOProteams

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This news comes as a relief as housing numbers during the past months has been mainly disappointing. However, much of the decline could be due to the fact that winter months are traditionally weak months for home sales. Still, declines were posted even after seasonally adjusted numbers.

The four week average for mortgage applications also showed encouraging figures as it also posted a small 0.8 percent increase. Helping some analyst post a rosier outlook for the future after continued reports of dismal number the past few months.

The drop in mortgage applications as some home buyers adopted a wait and see attitude after some programs like the $8,000 tax credit was extended in November. Other welcome developments include the government’s announcement that the home refinancing program would be in play until next year. Although most of the troubled homeowners have already applied for the refinancing program, continuing uncertainty about the state of the housing market could translate to new homeowners applying for the program.

The sale of previously owned homes continues to make up a large chunk of all new home sales. Homeowners have been quick to take advantage of the bargain prices. Other factors spurring home sales include low mortgage breaks and huge government funded programs aimed at homeowners.

The government has been responsible for keeping mortgage rates down. It has released billions of dollars in an effort to buy mortgage backed securities enabling these companies to offer lower mortgage rates.

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This is a sharp contrast to earlier efforts of keeping families in their homes and avoiding foreclosure. The string of government programs has largely been focused on making homes and mortgage payments affordable in an attempt to forestall foreclosure and spur new home sales.

The government’s mortgage refinancing program continues to suffer criticism as it has failed to reach the millions of homeowners it was originally targeted for. Only a fraction has been able to qualify for temporary mortgage refinancing and an even smaller number graduating into permanent modification.

Scheduled to take effect on April 5, the new government program could offer relief for hundreds of thousands of homeowners which have negative equity and unable to continue to pay their mortgage payments. The program allows homeowners to sell their homes thru a short sale which needed prior approval from a lender before pushing through.

The new program may not be popular for many mortgage providers as numbers show that lenders have not been comfortable with short sales. These types of sales are characterized as those whose proceeds from the sales come short of the outstanding balance in the loan, leaving the banks with losses. Banks require that homeowners who wish to undergo a short sale bring documented proof of hardship before any sale is approved.

With the new program, lenders may be forced to approve this type of sales. With banks being placed in a slight disadvantage, short sales could put additional strain on the already weak housing market. Short sales also required mortgage providers to forgive borrowers from their loans entirely, a prospect that isn’t economically sound.

Yet short sales might still offer a better alternative to foreclosures. The cost of foreclosures may run into the tens of thousands of dollars and with minimal chance of borrowers paying their mortgage in the near future short sales seem to offer both lender and borrower a win-win solution.

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The demand for foreclosed homes has outpaced demands in some areas giving rise to bidding wars. Many investors have been trying to cash in on these bargains with many inexperienced investors finding more than what they originally bargained for. This is why homebuyers are advised to get the help of a real estate professional for example before locking in a contract.

Stocks of foreclosed homes are expected to rise as banks start to move in homes which have failed to qualify for refinancing. Foreclosed properties in the past have been offered in auction style fashion, with homes sometimes being offered at ridiculously prices and the property going to the highest bidder.

Investors and prospective homeowners are advised to get help of professionals to determine the long term growth prospects of the property and assess the real costs of closing in the deal. Patience is the name of the game for many investors as profits are not expected in the short term but may take years after the housing market have fully recovered from its current slump.

Before locking in prospective homes there are some key factors to consider. Check for the history of the area and how the real estate market has been doing in the past. Research on the long term potential of the property’s location and see if there is any projected growth for the near future.

With the awful state at which homes are being abandoned, the home’s price should not be the only consideration. Get the aid of a house contractor and get an estimate on how much the house’s renovation costs. It wouldn’t be surprising to see homes being sold for less than $10,000, but the actual cost of renovations may run twice or thrice the home’s purchase price.

Losing a home to foreclosure is any homeowner’s worst nightmare, but this has also made the opportunity of owning a home possible for other families. With home prices expected to remain low, the prospect of finding a home which falls within your family’s budget is greater than ever. Low mortgage rates, the tax credit program and low prices have proven an effective mix for spurring interests in home sales.

Reported by REOProteams

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According to a report released by mortgage company Freddie Mac last Thursday, rates on 30 Yr Fixed Rate Mortgages fell to 4.97 percent this week down from 5.05 the previous week. Rates have been averaging around the 5 percent levels largely attributed to government efforts to keep interest rates down and increase home buying interest.

This seemed to set a trend as rates across all mortgages showed significant drops from last week. Average rates on 15 Yr FRM’s stood at 4.33 percent down from last week’s 4.4 percent. ARM’s also showed improvements over last week’s numbers as 5 Yr ARMs showed 4.11 percent down from 4.16 percent. These rates however do not include fees or points which are equivalent to 1 percent of the loan’s total value.

It has also helped troubled homeowners to lower their monthly mortgage payments by applying for mortgage refinancing. The government’s mortgage refinancing program allows homeowners to lock in lower interest rates hence decreasing the amount of mortgage payments. This however would be rendered useless once the rates climb up to their previous levels.

Economist believe that once the support from the government programs are withdrawn these would have negative repercussions on the housing markets recovery. Other reports show disappointing results as existing home sales posted decreasing numbers mainly due to bad weather and the cold winter months.

Reported by REOProteams

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The program aims to help home owners facing negative equity, or those with loans which are bigger than the actual market value. Facing foreclosure and negative equity a great majority of homeowners have opted to just walk away from their homes.

According to government estimates, around 5 million homeowners are in danger of foreclosure or defaulting on their next mortgage payment. Of the estimated supposed to be beneficiaries of the program only a small fraction or around 200,000 homeowners have been able to avail of the program so far. What is more disturbing is the speed at which applications are being processed which applicants could only describe as snail pace.

Homeowners have often complained about the pace at which banks have been processing their applications. But banks are also quick to counter that the sheer number of homeowners applying for refinancing has swamped their offices. Changes in government policy were also blamed as this just added confusion to those processing applications.

Detractors of the program believe that the program is bound to fail because it fails to address the real factors causing the problem. The refinancing program aims to help troubled homeowners by lowering their monthly mortgage payments by availing of the low interest rates today. But with most loans underwater or in negative equity a program which could decrease the total amount owed by homeowners could be of better help.

Along with the programs extension, important changes were also made. The previous ceiling for loan values was set at 105 percent, with the new policy, homeowners who find themselves owing up to 125 percent are now eligible for mortgage refinancing. The actual amount of loan limits which stood at $210,000 for a $200,000 home is now set at $250,000 for a similarly priced home.

Banks estimate that only 50 percent of the current applications which are under temporary modification will succeed in qualifying for permanent modification. This is because while rates are still lower than those of the previous year’s many homeowners are now without jobs and the real answer is not in lowering their mortgage payments but how can they pay their mortgage payments.

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This shows that the fundamental problems fuelling the housing crisis has yet to be addressed as the numerous government and private initiatives to spur the economy back on track is just not enough. The high unemployment numbers and strict lending policies have all but undermined government efforts.

The report released last Friday was the lowest since June. With billions of government dollars released since the start of the housing crisis, this figures show just how fragile the real state of the real estate market today. It has fuelled concerns that without continued government support, all progress might be lost. Some of these major government programs are scheduled to end this spring including the hugely popular $8,000 Tax Credit program.

“Most of the improvement that we’ve seen in housing over the past year has been tied to some sort of stimulus program,” said Wells Fargo economist Mark Vitner. “Now that we’re seeing those programs wind down, we’re seeing that housing is quite a bit weaker than what many people had thought.”

Majority of all home sales are made up of previously owned or foreclosed homes. With home market values posting drops of as much as twenty percent these past months, the prices of existing homes could only be described as a bargain, making the drop in their numbers even more disturbing.

Homeowners have been complaining about the difficulty of landing a mortgage or refinancing their existing home loans. With a sluggish economy and huge unemployment numbers still plaguing consumers, qualifying for a house loan is getting even more difficult.

Winter months have traditionally been slow in terms of home sales. But after seasonal adjustments on the numbers, home sales are still lower than forecasts. Until all the fundamental problems are worked out, even the billions of government dollars released might not be enough to sustain housing recovery.

Reported by REOProteams

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Many Americans who saw their income shrink have availed of this program as a way of providing relief and keeping their payments on time. FICO rules and guidelines concerning credit score, loan refinancing with previous history of on time payments drag credit scores lower. This as on-time homeowners applying for refinancing are shocked by their new credit score reports.

Lower credit scores means higher mortgage rates, on-time homeowners who wish to avail of the lower mortgage rates today may find out that their expected savings from availing of this program wouldn’t be that much. In fact they might just be extending their mortgage payments for a couple of years more without great savings.

JPMorgan Chase &Co, Citigroup Inc. and Bank of America Corp have reported sentiments made by homeowners. It shows growing concern that if present guidelines and rules remain in place, homeowners seeking refinancing under the administration’s Housing plan faces a lower FICO or credit score. It also calls for a full disclosure of the negative effect in the homeowners’ credit score or FICO ratings.

Almost two million homeowners have modified their loans since 2007, the Home Affordable Modification Program started last March aimed to curb the number of foreclosures and help homeowners reduce mortgage payments.

This plan does not only help homeowners avoid foreclosures generally helps the financial sector rebound from the housing crisis. The plan still has a lot to go, the lower cost loans are under a three month trial period, meaning the final impact of the program is still under study.

The Home Affordable Modification Program began in March to reduce mortgage payments for those who are delinquent or in danger of defaulting. The lower-cost loans are subject to a three-month trial period, meaning data for the completed number of modifications under the program is still pending. Existing modification programs have not been very effective and have fallen short of goals, said Senator Richard Shelby, a Republican from Alabama at a hearing on the housing programs in Washington.

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Filed under: News, Real Estate News Tagged: Bargain Homes, Bargain Properties, Las Vegas, Mortgage, Mortgage Basics, mortgage refinancing, Real Estate, Real Estate News ]]> http://sweetbargaindeals.com/2010/02/26/mortgage-refinancing-and-credit-scores/feed/ 0 reoproteams 3635935578_57434b6648_o