Short sales and loan modifications have grown , but banks are also turning to deeds-in-lieu of foreclosure more too. 20,000+ deeds-in-lieu of foreclosure occurred nationwide in 2012, up nearly 40 percent from 2011, according to RealtyTrac.
For example, deeds in lieu of foreclosure skyrocketed 76 percent year-over-year in California, 53 percent in Nevada, and 49 percent in Florida.
Deeds-in-lieu of foreclosure permit a lender to take a home without having to undergo the foreclosure process. The home owner is allowed to leave their mortgage debt and avoid foreclosure by turning over the home to the bank. Often times, a deed- in-lieu of foreclosure offers “cash for keys,” providing a cash payment to the distressed home owner in order for them to vacate the home, without letting the home fall into foreclosure.
Source: “Deeds in Lieu of Foreclosure: Naughty or Nice?” Forbes (April 23, 2013)
Mortgage applications rose 5 percent last week as mortgage rates declined, the Mortgage Bankers Association reported in its weekly mortgage market survey for the week ending April 12, which was released Wednesday.
Applications for refinancing’s, which make up the biggest bulk of the index, rose 5 percent, reaching its highest level since mid-January.
Meanwhile, mortgage applications for home purchases, viewed as a leading indicator of future home sales, ticked up 4 percent for the week, reaching its highest level since May 2010.
MBA reported 30-year fixed-rate mortgages, which are the most popular choice among home buyers, saw rates drop slightly last week averaging 3.67 percent, compared to 3.68 percent the prior week.
Source: “U.S. Mortgage Applications Rose 5% Last Week – MBA,” The Wall Street Journal (April 17, 2013)
Between 2004 and 2012, student loan balances nearly tripled, per a new survey from the Federal Reserve Bank of New York. What’s more, one-third of student loan borrowers are delinquent on their debt, according to the Federal Reserve report. This will impact their credit rating and possibly keep them out of the mortgage market much longer.
“Short term, you see a decrease in the number of first-time home buyers,” Brian Coester of Coester Valuation Management told CNBC. “You’re going to see somebody who would have been able to afford a more expensive house maybe go for the lower version or the downgraded version.”
Potential buyers with heavy student debt burden have been forced to rent or even move back in with their parents as they chip away at their debt.
“Long term it’s going to really affect especially the upper end, because people aren’t going to have the excess income to buy the jumbo property or buy that high end property,” says Coester. “It’ s going to affect home prices as a negative, as more of a cap, because it’s really debt that they are servicing.”
Source: “Student Debt Is Housing’s $1 Trillion Challenge,” CNBC.com (April 8, 2013)
Average fixed-rate mortgages dropped this week, as the 30-year fixed-rate mortgage has hovered around 3.5 percent for the past two months, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the following national averages for mortgage rates for the week ending April 4:
- 30-year fixed-rate mortgages: averaged 3.54 percent, with an average 0.8 point, dropping from last week’s 3.57 percent average. A year ago at this time, 30-year rates averaged 3.98 percent.
- 15-year fixed-rate mortgages: averaged 2.74 percent, with an average 0.7 point, dropping from last week’s 2.76 percent average. Last year at this time, 15-year rates averaged 3.21 percent.
- 5-year adjustable-rate mortgages: averaged 2.65 percent, with an average 0.5 point, falling from last week’s 2.68 percent average. Last year at this time, 5-year ARMs averaged 2.86 percent.
Source: Freddie Mac
Mortgage rates moved slightly higher this week, but still remain low by historical standards and are providing support to the ongoing housing recovery, Freddie Mac reports in its weekly mortgage market survey.
“Low and relatively steady mortgage rates are invigorating the housing market,” says Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages for mortgage rates for the week ending March 28:
- 30-year fixed-rate mortgages: averaged 3.57 percent, with an average 0.8 point, rising from last week’s 3.54 percent average. A year ago at this time, 30-year rates averaged 3.99 percent. The 30-year fixed-rate mortgage has remained below 4 percent for more than a year.
- 15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.7 point, rising from last week’s 2.72 percent average. Last year at this time, 15-year rates averaged 3.23 percent.
- 5-year adjustable-rate mortgages: averaged 2.68 percent, with an average 0.6 point, rising from last week’s 2.61 percent average. Last year at this time, 5-year ARMs averaged 2.90 percent.
Source: Freddie Mac
Lenders tightened up underwriting standards the last few years, making it difficult for creditworthy buyers to get approved for a loan. Federal Reserve Chairman Ben Bernanke said last week that the tightening of the mortgage market “has gone too far.”
But recent data released by Ellie Mae shows there may be some improvement in the loosening of credit. “The credit box may be expanding,” says Jonathan Corr, Ellie Mae president and CEO.
In its latest data release, Ellie Mae found that the average FICO scores for approved loans has started to drop — a 767 FICO average for all of 2012 compared to 761 FICO average for all approved conventional loans during February.
More applications for mortgages also were approved — 56.8 percent in February versus 55 percent in January, a slight improvement.
The refinance share of loan originations fell to 68 percent in February, from 73 percent in January, which is “a good sign since it indicates lenders are getting more serious about going after the purchase market,” Inman News reports.
Many say that banks are too strict with home loans. Lawrence Yun, chief economist for the National Association of REALTORS®, estimates that if credit conditions returned to “normal,” about 500,000 to 700,000 more home sales would occur this year.
Source: “Encouraging Signs That Mortgage Credit Is Easing,” Inman News (3/26/13)
The Federal Reserve’s policy-making committee announced it will continue to hold down short-term interest rates, which in turn will help keep mortgage rates low. But there is question of how much longer the central bank will do this.
The Fed said it will continue to buy $85 billion a month in Treasuries and mortgage-backed securities, but would reduce its asset purchase — known as “quantitative easing” — if job growth continues at its current pace.
Last year, the Fed committed to holding short-term interest rates near zero for as long as unemployment remained above 6.5 percent. In February, the unemployment rate was 7.7 percent. Many economists don’t expect unemployment to drop to levels around 6.5 percent until 2015.
Fed Chairman Ben Bernanke noted Wednesday that there is not consensus among the policy-making committee on how much longer to continue quantitative easing.
The committee recognized progress in the economy and job growth in recent months, noting “a return to moderate economic growth following a pause late last year.”
Bernanke has testified to Congress that quantitative easing has helped revive the housing market. Mortgage rates have fallen near all-time lows, with the average 30-year fixed-rate mortgage averaging 3.63 percent on March 14, according to Freddie Mac. In November 2012, 30-year rates fell as low as 3.31 percent.
Source: “Fed to Maintain Stimulus Efforts Despite Job Growth,” The New York Times (March 20, 2013) and“Bernanke Seen Keeping Up Pace of QE Until Fourth Quarter,” Bloomberg (March 20, 2013)
Mortgage rates moved lower this week, in time for the spring home buying season, Freddie Mac reports in its weekly mortgage market survey. After rising last week, the 30-year fixed-rate mortgage reversed course and inched down. The 30-year fixed-rate mortgage — the most popular — has remained below 4 percent for a year.
“Low and stable inflation is placing downward pressure on fixed mortgage rates,” says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at mortgage rate averages for the week ending March 21:
- 30-year fixed-rate mortgages: averaged 3.54 percent, with an average 0.8 point, dropping from last week’s 3.63 percent average. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.08 percent.
- 15-year fixed-rate mortgages: averaged 2.72 percent, with an average 0.7 point, dropping from last week’s 2.79 percent average. Last year at this time, 15-year rates averaged 3.30 percent.
- 5-year adjustable-rate mortgages: averaged 2.61 percent, with an average 0.6 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 2.96 percent.
Source: Freddie Mac
Mortgage rates are still near record lows but they have been inching up slightly in recent weeks as the U.S. economy shows some signs of improving. The 30-year fixed-rate mortgage—the most popular choice among home buyers—reached its highest level in more than six months last week, averaging 3.63 percent, according to Freddie Mac.
Mortgage rates are projected to rise higher this year, which could make buying a home more expensive. But some housing analysts say that the higher rates could actually help aid the housing recovery.
Home buyers who have been lingering on the market may finally move forward on a purchase. The increasing rates may drive home the point that while borrowing is still cheap, they’d better lock in a rate now before rates move any higher.
More at source: “Why higher mortgage rates will help the housing market,” Fortune (March 18, 2013)