Fixed Rates Reach Record-Low Averages for 6th Consecutive Week

06/07/2012 By: Esther Cho

As the employment situation continues to raise concerns, fixed rates fell even lower, slipping yet again to new record-lows, according to a survey from Freddie Mac released Thursday.

The 30-year fixed-rate mortgage averaged 3.67 percent (0.7 point) for the week ending June 7, falling from last week’s average of 3.75 percent. Last year at this time, the 30-year fixed was 4.49 percent.
The 15-year fixed rate declined even further below 3 percent to 2.94 percent (0.7 point), down from last week’s 2.97 percent. A year ago at this time, the 15-year was 3.68 percent.

“Fixed mortgage rates reached new record lows for the sixth consecutive week as long-term Treasury bond yields declined further following downwardly revised economic growth and job creation data,” said Frank Nothaft, VP and chief economist for Freddie Mac.
Nothaft cited recent reports showing gross domestic product rose only 1.9 percent in the first quarter as well as the disappointing 69,000 jobs added in May. In addition, the unemployment rate moved to 8.2 percent from 8.1 percent the month before in April.
The 5-year ARM remained unchanged from last week at 2.84 percent (0.7 point); a year ago, the 5-year ARM averaged 3.28 percent.
The 1-year ARM moved up to 2.79 percent (0.4 point), up from last week’s 2.75 percent. Last year, it averaged 2.95 percent.
Bankrate also released its survey on mortgage rates and reported record-low averages. The 30-year fixed slipped to 3.92 percent, down from last week when it averaged 3.94 percent. On the other hand, the 15-year fixed rose slightly to 3.16 percent from last week’s 3.15 percent.
The five-year fell to 2.99 percent from 3.01 percent last week.
Bankrate’s national survey uses data provided by the top 10 banks and thrifts in the top 10 market

FHA 203(k) Program Offers Way to Finance Repairs for Foreclosures

06/06/2012 By: Esther Cho 

Purchasing foreclosures also means discounts, but with the markdown is the price of repairs. According to RealtyTrac, foreclosures or REOs sold at an average discount of 27 percent compared to non-distressed properties in the first quarter of 2012. Through an FHA 203(k) loan, potential buyers who want to purchase a discounted foreclosure but don’t have cash for the repairs may find a way to receive financing.

According to HUD, the 203(k) program is the department’s main program for rehabilitating and repairing single family properties, and it’s viewed as an important tool to revitalize neighborhoods.

In order to be eligible, the property must be purchased as a primary residence or it can be for a HUD approved nonprofit. Also, the property must be a one-to four-family residence that has been completed for at least one year.
Dan Green, loan officer with Waterstone Mortgage and author of themortgagereports.com, explained the FHA 203(k) program can be used on any 1-4 unit residential property and is not limited to just HUD properties or foreclosures.
The maximum amount that can be taken out for the property is based on the value or the purchase price of the property before rehabilitation (whichever is less), plus the estimated cost of rehabilitation or 110 percent of the property after improvements, according to HUD.
A down payment is required, and the minimal amount for a down payment is 3.5 percent of the accepted bid price plus the cost of financing repairs.
Since there is more “file” to underwrite for an FHA 203(k) loan, Green said the approval process takes longer than a standard FHA mortgage.
“FHA 203k approvals take more time, but are no more difficult than any other mortgage type,” said Green. “Borrowers should expect to provide the documentation required, and should respond to loan officer requests in a timely manner.”

Freddie Mac Announces Lower Modification Interest Rate

06/04/2012 By: Tory Barringer 

Freddie Mac announced Friday that starting July 1, the GSE’s Standard Modification interest rate will come down from 5 percent to 4.625 percent.

The Standard Modification is for borrowers who do not qualify for the government’s Home Affordable Modification Program (HAMP). The modification makes payments more affordable by lowering a borrower’s principal and interest payments by at least 10 percent. The modification includes a trial period as does HAMP to ensure borrowers can maintain modified mortgage payments.
When evaluating a borrower for a Standard Modification in Workout Prospector®, users will be prompted to apply the 4.625 percent interest rate if the “Workout Decision Date” is on or after June 1.
Servicers may implement the new interest rate sooner. However, new borrower evaluations done before July do not require the new rate.
Freddie Mac may adjust the interest rate used for Standard Modifications based on market conditions.
The Freddie Mac Standard Modification is part of the Servicing Alignment Initiative, which is an effort to create consistency in how delinquent GSE loans are serviced.

Freddie Mac: 15-Year Fixed Falls Below 3%, 30-Year Fixed Hits New Low

05/31/2012 By: Esther Cho 

Following lower bond yields, the 15-year fixed fell below 3 percent, while the 30-year fixed set a new record-low as well, according to Freddie Mac’s Primary Mortgage Market Survey.

The 30-year fixed-rate mortgage dropped to 3.75 percent (0.8 point) for the week ending May 31. Last week, it averaged 3.78 percent, and last year, it was 4.55 percent.
The 15-year fixed slid into new territory, averaging 2.97 percent (0.7 point), down from 3.04 percent. A year ago at this time, the 15-year fixed stood at 3.74 percent.

The 5-year ARM averaged 2.84 percent (0.6 point), up from last week’s average of 2.83 percent. A year ago, the 5-year ARM averaged 3.41 percent.
The 1-year ARM remained unchanged from last week at 2.75 percent (0.4 point). The previous year, it averaged 3.13 percent.
Frank Nothaft, VP and chief economist for Freddie Mac, pointed to market concerns over the Eurozone, which led to a decline in long-term Treasury bond yields, as one reason for the drop in fixed rates.
“Compared to a year ago, rates on 30-year fixed mortgage rates are almost 0.9 percentage points lower which translates into nearly $1,200 less in annual payments on a $200,000 loan,” said Nothaft.
Bankrate.com also reported record-lows for fixed rates.
The 30-year fixed dropped to a new low of 3.94 percent, down from 3.97 percent last week. The 15-year fixed averaged 3.15 percent, also a record low. Last week, it was 3.19 percent.
The 5-year ARM slipped from 3.02 percent last week to 3.01 percent this week.
Bankrate’s national weekly mortgage survey includes data from the top 10 banks and thrifts in the top 10 markets.