In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage. For more details go to Real Estate Rama

From Mortgage News Daily

2010 has been the year of “near record low” mortgage rates. Regular readers are probably used to hearing us say:

* “We’re bouncing along just above record lows”
* “Lenders won’t go any lower”
* “The rewards of floating don’t outweigh the risks of floating”
* “It would take a serious economic downturn for mortgage rates to go lower”

Well. MBS prices are at all-time highs (AGAIN) and I think we can officially say mortgage rates are priced at their best levels ever. If not, we’re pretty darn close!

Major lenders were actually buying 4.25% note rates today! As far as I remember, that was the lowest rate I saw on a rate sheet last year (that didn’t cost 3 points). There were some days last year when 4.125% loans were traded, but seldom few. Those loan rates would’ve been quoted last March and early August.

For the most part I think it’s safe to say this is just about as good as it’s ever been…

Don’t get me wrong. I’m not talking “no closing cost” deals here. To close at these rates a consumer would have to pay more than one discount point, plus an origination fee. But the option is there if the borrower plans to live in their house forever and can afford to pony up the extra $$$ at closing. In reality, while record low rates are on the table, the best borrowers are finding their sweet spot around 4.625% while below average borrowers are priced around 4.875%.
What’s funny is this all happened after the Federal Reserve stopped buying mortgage-backed securities. THIS POST EXPLAINS WHY

What drove mortgage rates this low?

After all the “European Union/Greece/Spain/Portugal/China/North Korea/Iranian/Germany” drama we’ve gone through over the last 3-4 months, global markets have finally turned a skeptical eye on the U.S. ECONOMY. And at the moment, attention is firmly focused on U.S. HOUSING

Here is quick recap of recent housing data…

1. The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 18, 2010. IT WAS DISAPPOINTING. Mortgage loan application volume, decreased 5.9 percent on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 7.3 percent from the previous week. Refinances now make up 74.8 percent of new apps. The seasonally adjusted Purchase Index decreased 1.2 percent and is at 13-year low. READ MORE. SEE CHARTS
2. The FHFA Purchase Only Home Price Index rose 0.8 percent in April. READ MORE
3. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 2.2 percent to an annualized rate of 5.66 million units in May. WORSE THAN EXPECTED First-time buyers purchased 46 percent of those homes, down from 49 percent in April. But home prices are up 2.7 percent from last year! READ MORE. SEE CHARTS
4. Sales of new single-family houses in May 2010 fell 32.7 percent to an annual rate of 300,000. MUCH WORSE THAN EXPECTED! And…April, which was supposed to see tax credit expiration rush, was revised lower, from 504,000 to 446,000. READ MORE. SEE CHARTS
5. The OCC/OTS says mortgage payment delinquencies are on the decline but foreclosures are on the rise. Yikes Shadow Inventory. Borrowers who’ve already had their loan modified are re-defaulting ! READ MORE

We are going to hear more and more about a “double dip” in housing. Wait what? When did housing start recovering enough to warrant the classification of a double dip? We’ve seen some stabilization but the business feels the same now as it has over the past 10 months. Slow!

The fact is, purchase business was seasonal (around expirations) at best and borrowers looking to refinance over the last 10 months have been in no huge hurry to close. Mortgage operations haven’t been overwhelmed by an onslaught of borrowers as much as they’ve been delayed by long lists of underwriting approval stipulations that send originators on wild goose chases. Yes business is slow right now, but business has been slow for quite some time!

How much worse can it really get at this point?

The only way mortgage rates move any lower is if global investors really start to believe that an economic double dip is imminent. Unfortunately, at that point, low mortgage rates wouldn’t mean a darn thing! So I guess I am saying I wouldn’t mind seeing mortgage rates increase a few basis points. Anything to avoid seeing the housing market go under a global microscope. Then everyone will know how slow the market has really been over the past 10 months!

Keep your head up everyone. We’ve seen worse days…

Highlights

• To collect either tax credit, homes must be under contract by April 30.
• “The first thing they need to do is make sure they can get a mortgage.”
• Insurance premiums on FHA loans increase after April 2.

There are two homebuyer federal income tax credits: the first-time homebuyer tax credit of up to $8,000, and the move-up homebuyer tax credit of up to $6,500. Both come with deadlines.

To collect either tax credit, buyers have to have homes under contract by April 30. That means that both buyer and seller must have signed the purchase contract by that date. After that, there’s another deadline: The transaction has to close by June 30.

Below is a timeline for homebuyers who want to complete the transaction on time to collect the federal income tax credit. The following dates aren’t ironclad; the real estate agent, lender and title company will know if you need to deviate from this timeline because of your situation or location. Use this timeline as a general guide and as motivation to take action quickly.

Above all, let everyone — from the lender to the seller to the inspector — know about your deadlines

Compliments:

Chad E. Bahnsen

What does it all mean?The new guidelines will be extended to:

Repeat home buyers…
Current home owners that are looking to purchase a new home are eligible for the credit as well! To qualify as a repeat home buyer, you must have owned and lived in your current residence for 5 consecutive years. Now these home buyers can receive a credit for up to $6,500 or 10% of the cost of the home. The new home does not have to be more or less expensive than your current home. The same income limits apply as for first time home buyers.

The fine print..The fine print.. For both credits,

• The homes purchased must be less than $800,000.
• The credit is refundable, meaning it will be issued as a check to you if your tax liability is less than the refund.
• The new extension cannot be applied retroactively; for example, it cannot be used if a home was purchased before November 6, 2009 and the owners did not receive the credit because of the old income limits.

According to Victor Burek of Mortgage News Daily:

Low housing prices and low mortgage rates are not enticing new buyers to market yet.   With the purchase applications index showing disappointing numbers, you would think this would be bad for stocks; however, the futures market is pointing to a positive open.  Less home purchases will lead to less buying of furniture, flooring, appliances, etc… which will continue to keep retail sales numbers down.  In related news, Home Depot reported a 9.7% drop in first quarter sales while Lowes posted better than expected numbers and gave an optimistic outlook.   Chief executive officer for Home Depot gave a less than optimistic outlook due to the rising amount of foreclosures especially on the west coast.  It is going to be difficult for our economy to grow until the housing sector starts to see some improvement and foreclosures show a steady decline.

Early reports from fellow mortgage professionals are indicating lenders rate sheets to be very similar to yesterday’s.  This will keep the par 30 year conventional rate mortgage in the 4.625% to 4.875% range for the best qualified consumers.

With mortgage rates at the lowest rates in three years, now is definitely time to refinance if one has the equity to do so.

It’s official…Can you believe it…Countrywide is no longer….The most recognizable name in mortgage lending, will no longer operate under the name Countrywide….but under it’s parent name Bank of America. With their Clarity Commitment they are reinforcing responsible lending…again…

According to Market Watch

The Clarity Commitment is a simple one-page summary in straightforward language designed to make it easier for customers to understand terms of their loan. The summary includes information regarding interest rate, monthly payment, payment terms, and an explanation of closing costs and other loan information. Provided both at application and at closing, the Clarity Commitment document is available on most new purchase and refinance transactions, including traditional and government-backed loans.

The end of an era….and the beginning of a new one…Responsible lending….What a novel concept!

Just when I thought I had the 2008 First Time Homebuyer credit figured out, here comes a 2009 First Time Homebuyer credit that is better than the 2008 Credit…If you bought in December, 2008, I feel your pain! The 2009 credit is up to $8000 and never needs to be paid back…Contrast that with the 2008 credit of $7500 to be paid back over 15 years…Timing is everything! For more details on the American Recovery and Reinvestment Act of 2009, go to the IRS website . New details are emerging every day.