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The Home Affordable Refinance Program (HARP) has been extended until June 30, 2011, according to the Federal Housing Finance Agency (FHFA).

“FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said FHFA Acting Director Ed DeMarco, in a statement on its website.

“Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”

The program is one portion of the government’s Making Home Affordable Program, which also includes the Home Affordable Modification Program (HAMP).

It began in April 2009 and was set to expire on June 10 of this year; HAMP is expected to run until December 31, 2012.

Apparently things are worse than anticipated, what with more than 11.3 million, or 24 percent, of all residential properties with mortgages in the United States underwater as of year-end.

Of the more than four million refinanced mortgages purchased or guaranteed by Fannie Mae and Freddie Mac in 2009, 190,180 were HARP refinances with loan-to-value ratios between 80 percent and 125 percent.

If you’re looking to refinance with negative equity, this is your ticket.

Alarm bells sounded yesterday after it was relieved that the Obama Administration was considering an all-out “foreclosure ban.”

But it’s probably a big ado over nothing…essentially all foreclosures would be banned until the associated mortgages were reviewed for possible inclusion in the Home Affordable Modification Program (HAMP).

Currently, mortgage lenders and servicers can initiate foreclosure proceedings on any loan that hasn’t been submitted for HAMP eligibility, and foreclosure litigation can proceed even while borrowers are in trial loan modifications.

A document detailing the proposal obtained by Bloomberg said it “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.”

But it’s not a done deal, as Treasury spokeswoman Meg Reilly pointed out in an e-mail, claiming it was one of many ideas floating around and not yet approved.

Even if it were approved, would it really cause much of a stir or just delay things further? That’s debatable, but to me it seems it would just require lenders and servicers to take an additional step before initiating the inevitable.

Clearly a large number of loans are not eligible for HAMP.

Of the roughly 5.6 million homeowners that are 60-days or more delinquent, about 1.7 million are eligible for HAMP, so there would be plenty of easy outs.

Possible exclusions range from the home being vacant or non-owner occupied, the debt-to-income ratio falling below 31 percent, or the loan amount exceeding the conforming limit.

Additionally, 1.3 million homeowners have already received offers for trial loan modifications under the program, so it seems the proposal would do too little, too late.

But hey, if they don’t stop to consider you for HAMP inclusion, you can always bulldoze your house.

A staggering 67 percent of Californians who sold their homes in 2009 did so because they couldn’t meet their mortgage obligations, according to the California Association of Realtors’ 2009-2010 Survey of California Home Sellers.

“Tighter underwriting standards and a decline in equity continued to impact the market in 2009,” said C.A.R. President Steve Goddard, in a press release.

“Many homeowners chose to sell last year because their adjustable-rate mortgage reset at the same time home prices were experiencing an unprecedented decline, leaving them with little equity and difficulty in qualifying for a refinance.”

Difficulty meeting mortgage obligations was the top motivation to sell, followed by job loss and mortgage payment increase.

On average, homes sold for $20,958 less than the original asking price in 2009; the median difference between selling and listing price was $32,315.

The list-to-sold-price ratio was nearly four times wider between first-time sellers ($30,000 below list price) and sellers who had previously sold a home ($8,000 below list price).

First-time sellers accounted for 44 percent of all sellers in 2009, a 33 percent increase from 2008, and nearly triple the 15 percent share seen in 2007.

Financing difficulties complicated the sales process in a number of ways, with 63 percent of homes falling out of escrow prior to closing, and 70 percent of sellers citing that the “buyer could not get an acceptable mortgage.”

However, the primary reason homes fell out of escrow was because the buyer backed out, followed by buyer’s remorse, the bank withdrawing funding, and home prices continuing to fall.

The good news: lots of motivated sellers…

The bad news: nobody wants to buy…

Mortgage rates climbed back over that psychological five-percent threshold this week, according to government mortgage financier Freddie Mac.

The popular 30-year fixed averaged 5.05 percent during the week ending February 25, up from 4.93 percent last week, but slightly below the 5.07 percent seen a year ago.

The 15-year fixed trended higher as well, climbing to 4.40 percent from 4.33 percent, and now sits just below the 4.68 percent seen a year earlier.

“Interest rates for 30-year fixed mortgages followed long-term bond yields higher and rose above 5 percent this week amid a mixed set of economic data reports” said Frank Nothaft, Freddie Mac vice president and chief economist, in a press release.

“For instance, the January producer price index jumped well above the market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to the Conference Board.”

“New home sales, however, unexpectedly slowed in January to the smallest pace since records began in 1963, and the supply of homes at the current sales rate rose to 9.1 months, the most since May 2009.”

See how economic activity affects mortgage rates.

Adjustable-rate mortgages were a mixed bag, with the five-year ARM climbing to 4.16 percent from 4.12 percent, while the one-year ARM dipped to 4.15 percent from 4.23 percent.

A year ago, the five-year averaged 5.06 percent and the one-year stood at 4.81 percent.

The mortgage rates above are good for conforming loan amounts at 80 percent loan to value; pricing adjustments may lower or raise your actual contract rate.

Jumbo loans continue to price a percentage point or higher than conforming loans.

(photo: ginnerobot)

The Mortgage Bankers Association has unveiled a conceptual forbearance plan for unemployed borrowers unable to take advantage of existing loan modification programs such as the Home Affordable Modification Program (HAMP).

Under the program, dubbed “Bridge to HAMP,” loan servicers would reduce or postpone monthly mortgage payments for qualified borrowers based on their household income for up to nine months while they sought employment.

A qualified borrower is one who is unemployed involuntarily, living in an owner-occupied home, current or delinquent on the mortgage, with verifiable liquid assets, actively looking for work.

The unemployed homeowner would initially enter into a forbearance plan for up to 90 days (one phase), after which they would be reevaluated and possibly renewed for a total of two additional phases, or a maximum of nine months.

The end goal would be avoiding foreclosure and getting the borrower into the HAMP once they regain employment.

“The vast majority of new distressed borrowers we are seeing involve the loss of income,” said John A. Courson, MBA’s President and CEO.  “This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.”

Courson pointed to recent statistics that claim the average unemployed U.S. worker stays out-of-work for between six and seven months.

The program would rely on funds from the Treasury to supply loan servicers with advance payments during the forbearance period.

A loss sharing mechanism would also be established to encourage stakeholders, with a portion of the lost home value paid to the investor.

The proposal was sent to Treasury Secretary Tim Geithner for his consideration.

Blame it on the rain snow…

Home loan application volume slipped 8.5 percent on a seasonally adjusted basis during the week ending February 19, according to the latest weekly survey from the Mortgage Bankers Association.

Refinance applications were off 8.9 percent compared with the previous week, while purchase activity slipped 7.3 percent to its lowest point since May 1997 (so much for the homebuyer tax credit).

The unadjusted purchase index fell 3.6 percent compared to one week earlier, and was off 13.4 percent from a year ago.

“As many East Coast markets were digging out from the blizzard last week, purchase applications fell, another indication that housing demand remains relatively weak,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, said in the release.

“With home prices continuing to drift amid an abundant inventory of homes on the market, potential homebuyers do not see any urgency to lock in purchases.”

Still, purchases grabbed a larger share of total mortgage activity, with the refinance share slipping to 68.1 percent of applications from 69.3 percent a week earlier.

Meanwhile, interest rates moved higher, with the 30-year fixed climbing to 5.03 percent from 4.94 percent, and the 15-year fixed rising to 4.35 percent from 4.33 percent.

The one-year adjustable-rate mortgage also increased, averaging 6.80 percent during the week, up from 6.67 percent.

But the ARM-share of mortgage activity still managed to increase from 4.4 percent to 4.7 percent of total applications.

The MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or declined apps, which have surely risen in recent years.

There’s no beachfront property in Nevada, but 70 percent of it is underwater.

Yep, a staggering 70 percent of residential properties with mortgages were underwater as of the end of 2009, meaning the mortgage balance exceeded the property value, according to the latest report from First American CoreLogic.

Arizona wasn’t far behind with 51 percent of mortgage properties underwater, followed by Florida (48%), Michigan (39%), and California (35%).

The average negative equity share was 42 percent for these top five states, while the nationwide share was just 15 percent.

California led the nation in terms of the number of negative equity mortgages with 2.4 million, followed by Florida with 2.2 million – the pair accounted for 41 percent of all negative equity loans.

In total, more than 11.3 million, or 24 percent, of all residential properties with mortgages were in a negative equity position as of year-end.

That’s up from 10.7 million, or 23 percent, as of the end of the third quarter of 2009.

An additional 2.3 million mortgages had less than five percent equity at year-end, meaning they were steadily approaching negative equity positions.

Together, negative equity and near-negative equity mortgages accounted for almost 29 percent of all residential properties with a mortgage nationwide.

That’s not good news, considering negative equity and mortgage default seem to go hand-in-hand…

Of course, of the over 47 million homeowners with a mortgage nationwide, the average loan to value ratio (LTV) is only 70 percent.

(photo: anne.oeldorfhirsch)

There’s no beachfront property in Nevada, but 70 percent of it is underwater.

Yep, a staggering 70 percent of residential properties with mortgages were underwater as of the end of 2009, meaning the mortgage balance exceeded the property value, according to the latest report from First American CoreLogic.

Arizona wasn’t far behind with 51 percent of mortgage properties underwater, followed by Florida (48%), Michigan (39%), and California (35%).

The average negative equity share was 42 percent for these top five states, while the nationwide share was just 15 percent.

California led the nation in terms of the number of negative equity mortgages with 2.4 million, followed by Florida with 2.2 million – the pair accounted for 41 percent of all negative equity loans.

In total, more than 11.3 million, or 24 percent, of all residential properties with mortgages were in a negative equity position as of year-end.

That’s up from 10.7 million, or 23 percent, as of the end of the third quarter of 2009.

An additional 2.3 million mortgages had less than five percent equity at year-end, meaning they were steadily approaching negative equity positions.

Together, negative equity and near-negative equity mortgages accounted for almost 29 percent of all residential properties with a mortgage nationwide.

That’s not good news, considering negative equity and mortgage default seem to go hand-in-hand…

Of course, of the over 47 million homeowners with a mortgage nationwide, the average loan to value ratio (LTV) is only 70 percent.

(photo: anne.oeldorfhirsch)

Los Angeles Attorney General Edmund G. Brown Jr. warned Californians today to avoid “forensic loan audits,” referring to them as the latest “phony foreclosure-relief service.”

He said homeowners pay up-front fees for a review of their lender’s practices, only to be provided nothing in the way of foreclosure prevention.

The service essentially audits a borrower’s loan file to determine if the original lender complied with state and federal mortgage lending laws.

If flaws are found, homeowners are told they can use them against the bank to speed up a loan modification or gain leverage to set up some kind of deal.

Ironically enough, some of these loan auditors may have been the same loan originators that broke the rules in the first place.

“Forensic loan audits are yet another phony foreclosure-relief service hawked by loan-modification consultants trying to cash in on the desperation of homeowners facing foreclosure,” Brown said in a release.

“The foreclosure-relief industry continues to be long on promises, but short on results.”

Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies, resulting in criminal charges and prison sentences for dozens of consultants.

Last year, the California Department of Real Estate (DRE) investigated more than 2,000 complaints involving loan-modification scams, with nearly 350 individuals and companies receiving a Desist and Refrain Order to stop illegal activity.

Upfront fees on loan modifications, which are already illegal in California, are set to be banned nationwide, according to a proposed rule by the FTC.

File this under: extreme foreclosure prevention.  Or maybe strategic bulldozing.

A man in Moscow, Ohio decided to bulldoze his own home after a bank began foreclosure proceedings, according to local NBC affiliate WLWT.com.

Homeowner Terry Hoskins reportedly had tax liens placed on his carpet store and commercial property after his brother and one-time business partner sued him.

The bank then claimed the commercial property, along with his personal residence as collateral.

Hoskins only owed $160,000 on the home allegedly valued at $350,000, and had an offer from a buyer for $170,000, but the bank said it could make more foreclosing on the property.

That obviously angered Hoskins, forcing him to resort to extreme measures by knocking the home down into mere rubble, sending a strong message to the bank.

“As far as what the bank is going to get, I plan on giving them back what was on this hill exactly (as) it was,” Hoskins told the station. “I brought it out of the ground and I plan on putting it back in the ground.”

An auction is scheduled for his business on March 2, and he is apparently considering leveling that building as well.

Of course, there are consequences to his actions, and he could face criminal charges.

But it seems like he’s garnering a lot of support online, and in light of the ongoing anti-bank sentiment out there, he may just be able to turn the whole thing into a positive.

A record 15.02 percent of all mortgages were at least one payment behind or in foreclosure as of the end of the fourth quarter, according to the latest delinquency survey from the Mortgage Bankers Association.

The non-seasonally adjusted delinquency rate increased 50 basis points from 9.94 percent in the third quarter of 2009 to 10.44 percent, while foreclosures increased 11 basis points to 4.58 percent.

However, the percentage of loans on which foreclosure actions were started slipped quarter-to-quarter, as did the 30-day delinquency rate, a rarity for the fourth quarter.

“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight, said Jay Brinkmann, MBA’s chief economist.

“We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors. Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent.”

“Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude.”

However, 90-day + delinquencies now account for more than half of all delinquencies outstanding, the highest share in the history of the MBA survey.

So foreclosure rates could continue to rise, as many of these severely delinquent borrowers are in loan modification programs, which seem to re-default at a pretty unhealthy rate.

In Florida, 26 percent of mortgages were one payment or more past due, while 20.4 percent were 90 days or more past due or in some stage of foreclosure.

Nevada was the second worst state, with 24.7 percent of mortgages one payment or more late, and 19 percent 90 days + late or in foreclosure.

All that said, the MBA is hopeful this could be a turning point.

“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs,” said Brinkmann.

Believe it or not, housing affordability ended 2009 near its record-high, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) release.

The HOI revealed that 70.8 percent of all new and existing homes sold in the final quarter of 2009 were affordable to families earning the national median income of $64,000.

Affordability was up slightly from the previous quarter, just below the record-high 72.5 percent set in the first quarter of 2009, and well above the 62.4 percent rate seen in the fourth quarter of 2008.

But aren’t home prices still largely inflated? Many would argue yes, but mortgage rates are so historically low that affordability has been driven down artificially.

That, along with the issue of unemployment and underemployment, may explain why the super high affordability hasn’t been reflected in recent home sales data.

Indianapolis was the most affordable metro, with 95 percent of sales during the quarter affordable to households earning the median $68,100.

Other highly affordable major metro housing markets included Detroit-Livonia-Dearborn, Mich.; Dayton, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Akron, Ohio.

The New York-White Plains-Wayne, N.Y.-N.J. Continued to be the least affordable metro, with less than 20 percent of all homes sold during the quarter affordable on the median income of $64,800.

Other major metros near the bottom of affordability included San Francisco; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Redwood City, Calif.

So how do they measure affordability anyways?

Well, the NAHB assumes a family can afford to spend 28 percent of its gross income on housing (debt-to-income ratio), while putting 10 percent down.

It is also assumed that the home buyer would take out a 30-year fixed-rate mortgage.

Mortgage rates strung together two consecutive weeks of declines and are nearing record low territory again, according to the latest survey from mortgage financier Freddie Mac.

“Mortgage rates eased for the second week, while economic data releases suggest that the housing market may be in a slow state of recovery,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

The hot, hot, hot 30-year fixed averaged 4.93 percent during the week ending February 18, down from 4.97 percent last week and 5.04 percent a year ago.

The 15-year fixed slipped a single basis point to 4.33 percent, and sits firmly below the 4.68 percent seen this time last year.

Adjustable-rate mortgages got in on the fun too, with the five-year ARM slipping to 4.12 percent from 4.19 percent, about a point below the 5.04 seen a year ago.

The one-year ARM fell 10 basis points week-to-week to average 4.23 percent, and is more than a half point below the 4.80 percent average seen last year.

The interest rates above are good for conforming loan amounts at 80 percent loan-to-value; mortgage pricing adjustments may lower or raise your actual contract rate.

Jumbo loans continue to price about a percentage point higher than conforming loans.

The Home Affordable Modification Program (HAMP) has finally gotten some legs, with permanent loan modifications doubling last month compared to December, according to the Treasury.

More than 116,000 homeowners have now received permanent HAMP modifications and another 76,000 have been offered to borrowers, with only the borrower signature in the way of being finalized.

At the same time, 60,476 trial modifications and 1,005 permanent loan modifications have been cancelled; hopefully asking for full income documentation prior to extending an offer will make future mods more successful.

“With nearly one million homeowners paying less each month and the number of permanent modifications steadily rising, HAMP is doing the job it was designed to do,” said Phyllis Caldwell, Chief of Treasury’s Homeownership Preservation Office, in the release.

“Struggling families are receiving payment relief and the housing market is showing signs of stabilization.”

The Treasury said 57.4% of the permanent loan modifications have gone to borrowers coping with unemployment or a reduction in hours or wages.

More than ten percent cited “excessive obligation” as the main reason for hardship, and principal borrower illness (2.7%) was the third most common reason.

In total, 1.3 million homeowners have received offers for trial loan modifications under the program, and a cumulative savings of $2.2 billion has been achieved for the 940,000 borrowers actively taking part.

The median monthly mortgage payment has been reduced by $521.85.

All of the permanent loan modifications involved an interest rate reduction, 41.7 percent included a term extension, and 27.4 percent had principal forgiven.

Of the roughly 5.6 million homeowners that are 60-days or more delinquent, about 1.7 million are eligible for HAMP.

Possible exclusions range from the home being vacant or non-owner occupied, the debt-to-income ratio falling below 31 percent, or the loan amount exceeding the conforming limit.

(top photo: bitzi)

Don’t get too excited, but the median price paid for a Southern California home rose above the year-ago level for the second consecutive month in January, according to DataQuick.

The median price paid for all houses and condos sold in the Southland last month was $271,500, down 6.1 percent from $289,000 in December, but up 8.6 percent from $250,000 a year earlier.

It was actually the first month-to-month decline in eight months, though that was driven more by seasonality and foreclosure sales than any real underlying trend.

“The January stats underscore just how atypical this market remains. A huge chunk of what’s selling is still distressed,” said John Walsh, MDA DataQuick president, in the release.

“Investors and first-time buyers continue to dominate many areas, while the move-up market has yet to kick in. For many, the financing to buy high-end homes remains difficult, if not impossible, to obtain.”

More home sales are occurring in the cheaper inland areas as well, with 35.2 percent of sales in the hard-hit Inland Empire (Riverside and San Bernardino counties), up from 32.3 percent in December.

Meanwhile, jumbo financing on higher-priced homes remains constrained, with the loans accounting for just 14.2 percent of all home purchase loans during the month.

And that includes anything over the old conforming loan limit of $417,000, not the new conforming-jumbo limit.

Buyers who appeared to pay in cash accounted for 28.9 percent of January sales, up from 25.7 percent in December and 22 percent in January 2009.

Home “flipping” also trended higher during the month, with 3.5 percent of home sales previously sold between three weeks and six months prior.

In total, 15,361 new and resale homes closed escrow last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, down 31.2 percent from December’s 22,328 sales, but up 0.9 percent from the 15,227 sold in January 2009.

Mortgage demand decreased for the second week in a row, falling 2.1 percent on a seasonally adjusted basis during the week ending February 12, according to the Mortgage Bankers Association.

On an unadjusted basis, the home loan application index was off just 0.5 percent compared with the previous week, with some simply blaming it on the weather (all those snowstorms).

Refinance activity slipped 1.2 percent and the seasonally adjusted basis purchase index was off four percent from one week earlier.

However, the unadjusted purchase index was up one percent compared to a week earlier, though it was 18.4 percent lower than the same week a year ago.

The refinance share of mortgage activity fell to 69.3 percent of total applications, down from 69.7 percent a week earlier.

Meanwhile, both the popular 30-year fixed and the less popular 15-year fixed remained unchanged at 4.94 percent and 4.33 percent, respectively.

The one-year adjustable-rate mortgage was a lot more active, falling a single basis point to 6.67 percent.

These interest rates are good for mortgages at 80 percent loan-to-value.

The ARM-share of total applications decreased to 4.4 percent from 4.5 percent during the week, as fixed-rate mortgages continue to dominate.

The MBA survey covers more than half of all retail, residential mortgage applications, but does not factor out declined or duplicate apps.

If you’ve been shopping mortgage rates lately, you may be wondering why the APR is sometimes lower than the advertised interest rate.

The APR, or annual percentage rate, is the interest rate of the loan factoring in specified closing costs like the loan origination fee, processing fees, mortgage insurance, and so forth.

That said, if a mortgage rate is fixed for 30 years, those fees will push the APR above the interest rate.

For example, on a $300,000 loan, a 30-year fixed mortgage offered at 5.00 percent with $5,000 in costs and fees has an APR of 5.15 percent.

But what about interest rates tied to adjustable-rate mortgages? Why do they always seem to display an APR lower than the rate? Don’t they have the same fees that would also increase the APR?

The answer comes in how ARMs are calculated; because they’re only fixed for a certain period, be it one year or five.

The remaining portion of the 30-year amortization period must be estimated, based on the current mortgage index plus the margin, which varies by bank or lender.

So if a a five-year ARM has a start rate of 4.00 percent, and the margin is 2.25 percent and the associated index is 1.00 percent, the loan would eventually adjust lower (for simplicity sake, to 3.25%) after the initial fixed five-year period.

In other words, during the first 60 months, the interest rate would be 4.00 percent, and the projected rate thereafter would be 3.25 percent for the remaining 300 months.

The result would be a lower APR, factoring in the perceived rate decrease, despite the fact that the associated mortgage index could increase during the fixed period.

(photo: mandigaga)

A New Jersey-based company has launched an incentive-based program to address the risk of strategic default, which is surely on the rise as a result of sinking property values.

Loan Value Group, LLC’s “Responsible Homeowner Reward” (RH Reward) program creates incentives for homeowners to stay current on payments without changing the terms of the loan or reducing principal.

The firm’s proprietary model evaluates borrowers and singles out those most at risk of strategic default, using metrics like income, geography, and amount of negative equity.

“The desired outcome for all parties is to create an incentive for the borrower that positively influences behavior, at a cost to the risk owner that is far cheaper than every other option, including delinquency, sale of the note, or default,” the release said.

Loan Value Group believes the program has a number of advantage over traditional loss mitigation strategies like loan modifications.

Specifically, the company believes it can enroll borrowers in a number of days versus months, at a much lower cost, and if they happen to re-default, they won’t receive the reward, so there’s less downside risk.

That’s pretty important, considering the near-50 percent re-default rate on many industry loan modifications.

“The mortgage is not being restructured and accordingly does not have to go through the many legal and administrative hurdles experienced in a normal modification,” the company added.

The big question is how large the reward will need to be to entice the homeowner to stick around, especially if they’re deeply underwater.

That reward will vary based on a number of factors, with the most at risk of strategic default probably receiving the most lucrative offer.

The company has already signed on “one of the largest investors in consumer and mortgage debt in the U.S.,” who has purchased and sold more than $5 billion in debt since 2008.

The Mortgage Bankers Association sold its Washington D.C. Headquarters at a multi-million dollar loss to commercial real estate firm CoStar Group, according to the WSJ.

The bankers group apparently parted with the property for $41.3 million, well below the reported $79 million paid back in 2007, while it was still under construction.

The sprawling 170,000-square foot, 10-story building at 1331 L St. NW was completed in the summer of 2008, and put up for sale just over a year later.

At the time, MBA chief John Courson warned it was dealing with a “challenging leasing environment,” adding that continued ownership of the building would be “imprudent” and hinder its services over the long term.

The MBA’s membership has dwindled in recent years as a result of the mortgage crisis, falling from roughly 3,000 to about 2,400 members.

At the same time, the MBA has laid off about 30 percent of staff.

When the MBA first secured the property valued at $100 million, it was required to come in with a larger-than-expected down payment and a less favorable interest rate because of the timing of the deal.

So much for it’s always a good time to buy…

CoStar said it was able to take advantage of what it saw “as a historic opportunity to secure an exceptional asset at a greatly reduced price.”

The FTC has proposed a new rule that would ban upfront fees for loan modification services nationwide.

Per the rule, companies offering such services would have to wait until after receiving a documented offer from the loan servicer or mortgage lender to collect payment.

“Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” said FTC Chairman Jon Leibowitz, in a press release.

“The proposed rule would outlaw up-front fees so companies can’t take the money and run.”

Additionally, the rule would ban providers from telling consumers to stop communicating with their lenders or loan servicers, advice that could land a borrower in even more trouble.

And to stop sharing misleading facts regarding the the cost, refund, and cancellation policy, the chances of getting a loan modification, and how long one might take.

Loan modification providers would also need to disclose the total price of the service, that they’re “for-profit” businesses unaffiliated with the government or the consumer’s lender/servicer, and that there is no guarantee the lender will agree to modify the loan.

Of course, the proposed rule generally exempts entities that own or service mortgage loans, and lawyers would have limited exemption if they represent consumers in a bankruptcy or other legal proceeding (always loopholes).

Upfront fees are already banned in 20 states, most notably California and New York.

Take a look at the worst loan modification companies, per MFI-Mod Squad, and always do your due diligence before working with anyone.

The FTC proposal has a 45-day public comment period ending March 29, 2010; this may have been helpful a year ago…

The number of million-dollar plus homes sold in the Golden State fell for the fourth consecutive year, according to DataQuick.

Just 18,621 million-dollar plus homes sold in California last year, down 23.8 percent from the 24,436 sold in the state during 2008.

Such sales peaked in 2005, when a staggering 54,773 were sold; last year’s total was the lowest sales count since 2002, when only 15,703 were sold.

“Prestige home sales are a unique sub-category of the real estate market,” said John Walsh, DataQuick president. “The buyers and sellers respond to a different set of motivations. In the multi-million-dollar price ranges, decisions are largely discretionary and aren’t as dependent upon jobs, prices and interest rates the way they are for most buyers and sellers.”

“Traditional million-dollar markets are holding up relatively well, while expensive markets that emerged four or five years ago are not,” he added.

Meaning far fewer million-dollar home sales in areas like Riverside County.

Roughly 1,900 homes previously sold for one million or more sold for six figures; the median price decline between the 2009 sale and the previously $1 million-plus sale was about $420,000, a 35 percent decline.

A Bel-Air home sold for $26.5 million in July was the most expensive sale in the state last year; another 332 homes sold for more than $5 million, 228 sold between $4-$5 million, and 590 sold in the $3 million range.

About 29 percent of the sales were financed with cash, up from 24 percent in 2008; of those who did finance with jumbo loans, the median down payment was 39.4 percent.

Last year, Notices of Default, the first step of the foreclosure process, were filed on 4,925 homes previously sold for over one million dollars.

Trustees Deeds, or homes actually lost to foreclosure, totaled 2,698 on homes previously sold for $1 million plus.

Total California home sales at all price levels increased 16.9 percent last year to 460,166, up from 393,703 in 2008.

The 30-year fixed climbed back above five percent this week, rising two basis points to 5.01 percent, according to mortgage financier Freddie Mac.

A year ago, the popular mortgage program averaged 5.25 percent, meaning interest rates have been attractive for a long, long time now.

“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release.

“Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors®.”

The 15-year fixed averaged 4.40 percent this week, up from 4.39 percent last week, but well below the 4.92 percent average seen a year ago.

The five-year adjustable-rate mortgage climbed to 4.27 percent from 4.25 percent, but still remains about a point below the 5.26 percent seen this time last year.

Finally, the one-year ARM bucked the trend, slipping to 4.22 percent from 4.29 percent, and easily beating its year-ago average of 4.92 percent.

The interest rates above are good for conforming loan amounts with a loan to value of 80 percent; mortgage pricing adjustments may lower or raise your actual interest rate.

Jumbo loans continue to price a percentage point or higher than conforming loans.

The share of refinancing involving cash-out fell to its lowest point since Freddie Mac began analyzing such data back in 1985.

During the fourth quarter of 2009, just 27 percent of borrowers who refinanced increased their loan balance by five percent of more; the previous lowest cash-out refinance share was 33 percent during the second quarter of 2003.

“In the fourth quarter, about $11 billion in home equity was cashed out by homeowners when they refinanced their conventional prime-credit home mortgage, the smallest quarterly amount in nine years,” said Amy Crews Cutts, Freddie Mac deputy chief economist, in a statement.

“Over 2009, the total amount of equity cashed out was just under $70 billion, the lowest annual total since 2000, when $26 billion was extracted.”

Meanwhile, the share of “cash-in” transactions hit an all-time high, with 33 percent of borrowers who refinanced their loan lowering their principal balance.

Of course, this was probably not by choice, and rather a requirement to complete the refinance, as the loan balance likely exceeded the current property value or the maximum loan to value limit.

The median appreciation of the collateral property tied to the refinanced loans was negative two percent over a median life of the prior loan of 3.6 years.

The good news, I suppose, is that homeowners were able to reduce loan balances and obtain lower interest rates, with consumers cutting $100 billion dollars in revolving debt from their obligations between September 2008 and November 2009.

(top photo: og2t // ou gee tew tee)

Former top mortgage lender Countrywide, now owned by Bank of America, failed to bring an additional 7,500 jobs to the state of Texas as promised back in 2004.

Six years ago, the Calabasas, CA-based home loan lender received a $20 million grant after pledging to create 7,500 new jobs in the Lone Star State by 2010.

But after the unprecedented mortgage crisis, subsequent layoffs, and its merger with Bank of America, the company failed to make good on the promise.

Bank of America reportedly notified Texas Governor Rick Perry’s office on December 31, 2009 that it was terminating the $20 million deal, as it was unable to meet the goal, falling more than 1,600 jobs short of target.

As a result, the company will repay $8.45 million to the state.

Countrywide said it had created 4,530 net new jobs in Texas in 2005 and 2006, exceeding its target for those two years, as well as its third year target of 4,000 jobs by January 2008, including layoffs and attrition.

But the company was expected to create 5,500 new jobs by the end of 2008, and could only squeeze out 3,876.

A year later, BofA spokesman Rick Simon concluded that it was best interest of all parties involved to bring the contract to an end.

Back in 2007, a fifth of Countrywide’s staff was based in Texas, and the company still has 23,000 employees based there.

Countrywide wasn’t the only company unable to fulfill its promise; 20 other companies receiving grants from the fund failed or struggled to meet job creation targets in 2008 as well.

(photo: mtsrs)

Mortgage rates pretty much moved as little as possible while still managing to move this week, according to the latest survey from mortgage financier Freddie Mac.

The uber-popular 30-year fixed slipped a single basis point to 4.98 percent during the week ending January 28, and remains just below the 5.10 percent seen this time a year ago.

The 15-year fixed also fell a single basis point from 4.40 percent to 4.39 percent, and is still beating its year-ago average of 4.80 percent.

“Mortgage rates held steady this week ahead of the Federal Reserve’s (Fed) policy committee meetings,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

“The Fed announced on January 27th that economic activity has continued to strengthen. It also noted that with substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time” (Why mortgage rates move).

Adjustable-rate mortgages were even more erratic, with the five-year ARM dipping two basis point to 4.25 percent and the one-year ARM plummeting three basis points to 4.29 percent.

A year ago, the five-year ARM averaged 5.27 percent and the one-year ARM stood at 4.90 percent.

The mortgage rates above are good for conforming loan amounts at a loan to value of 80 percent; pricing adjustments may raise or lower your actual rate.

Jumbo loans continue to price a percentage point or more higher than conforming loans.

(photo: eddie~s)

Mortgage defaults in the Golden State dropped 24.3 percent in the fourth quarter compared to a quarter earlier, but were still 12.4 percent higher than a year ago, according to DataQuick.

A total of 84,568 Notices of Default (the first step in the foreclosure process) were recorded between October and December, compared to 111,689 in the prior quarter and 75,230 in the fourth quarter of 2008.

On primary mortgages, California homeowners were a median five months behind on payments when the lender filed the NOD, owing a median $13,510 on a median $325,818 loan amount.

The company said the drop in defaults may be the result of shifting market conditions and/or changing foreclosure policies among mortgage lenders and loan servicers.

In other words, it’s not necessarily a sign of a housing recovery.

“Clearly, many lenders and servicers have concluded that the traditional foreclosure process isn’t necessarily the best way to process market distress, and that losses may be mitigated with so-called short sales or when loan terms are renegotiated with homeowners,” said John Walsh, DataQuick president, in a release.

NODs hit an all-time high of 135,431 in the first quarter of 2009; the low in recent years was 12,417 in the third quarter of 2004, when annual home price appreciation was around 20 percent.

Countrywide (5,588) originated the most loans that went into default last quarter, followed by Wells Fargo (3,482) and Washington Mutual (3,460).

Trustees Deeds recorded, which reflect the number of homes or condos actually lost to foreclosure, totaled 51,060 in the fourth quarter, up 2.1 percent from the prior quarter and 10.6 percent from the fourth quarter of 2008.

The good news, I suppose, is that 84.8 percent of the 328,310 homes foreclosed on statewide in the 18-month period ending last September had been re-sold by the end of 2009.

A year prior, the comparable number was just 66 percent, so at least they’re not adding as much to the inventory glut.

FDIC chief Sheila Bair, who spearheaded loan modification efforts early on at failed institutions such as Indymac, received a rather interesting mortgage from Bank of America last summer, according to a report from The Huffington Post Investigative Fund.

Her family reportedly purchased a $1.1 million home in the Maryland suburbs in July, borrowing $898,000 from Bank of America.

At the same time, they refinanced their former home in Amherst, Massachusetts as a second home (or vacation property).

Only problem is the “second home” is a duplex, and Bank of America doesn’t seem to permit financing on multi-unit second homes.

It would need to be declared as an investment property, which is subject to a higher interest rate and more financing restrictions that may have killed the deal entirely.

If you think the duplex issue is a simple oversight, consider the fact that she also rents out the “second home,” bringing in between $15,000 and $50,000 annually as a result, per her most recent financial disclosure.

The loan documents tied to the “second home” included a rider stating it was to be used for their “exclusive use and enjoyment” and could not be used as a rental property.

Also consider that this type of scenario is a common type of occupancy fraud, whereby borrowers claim a property is a second home instead of an investment property to qualify or obtain a lower rate.

Not only that, but she met with the Charlotte-based bank regarding bailout talks in the weeks between the closings of her two mortgages (Bank of America wound up with $45 billion, the second most of any bank).

To resolve that issue, the FDIC gave her a retroactive waiver, as the agency prohibits employees from participating in any matters involving a bank seeking a loan.

Oh, and Bair landed a 5.62 percent interest rate on the 30-year fixed tied to the “second home” in Amherst, and six percent even on the jumbo loan attached to the primary residence in Maryland.

It works from the top down folks…

(photo: erix!)

Mortgage rates decreased for a third straight week, sliding below the all-important psychological five-percent threshold, according to mortgage financier Freddie Mac.

The widely popular 30-year fixed averaged 4.99 percent during the week ending January 21, down from 5.06 percent last week and 5.12 percent a year ago.

The 15-year fixed continued to move lower, averaging 4.40 percent this week, down from 4.45 percent last week and 4.80 percent last year.

Fixed mortgages rates continue to follow bond yields lower (how mortgage rates work).

“Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th,” said Frank Nothaft, Freddie Mac chief economist, in a statement.

The five-year adjustable-rate mortgage slipped to 4.27 percent from 4.32 percent, and sits nearly a point below the 5.24 percent seen last year.

The one-year ARM also improved, falling to 4.32 percent from 4.39 percent, 60 basis points lower than the 4.92 percent average of a year ago.

The mortgage rates above are good for conforming loan amounts at 80 percent loan-to-value with no pricing adjustments factored in.

Jumbo loans continue to price a percentage point or so higher than conforming loans.

The FHA has taken a number steps to address risk and strengthen its balance sheet, including requiring larger down payments and higher mortgage insurance premiums.

The upfront mortgage insurance premium (MIP) will be raised from 1.75 percent to 2.25 percent to “build up capital reserves and bring back private lending.”

The FHA will also request legislative authority to increase the maximum annual MIP so it can shift some of the cost, as annual premiums are paid over time, proving to be less of a barrier for prospective buyers.

New FHA borrowers will also be required to come in with a 10 percent down payment if their Fico score is below 580; those with scores of 580 and above can still qualify for the 3.5 percent minimum payment.

In other words, if you have terrible credit, you can still get a mortgage with just 3.5 percent down.

Finally, the FHA will reduce allowable seller concessions from six percent to three percent, in line with industry standards.

The current level essentially exposes the FHA to excess risk by creating incentives to inflate appraised values.

The proposed changes will go into effect in either spring or summer, giving lenders time to speed applications through the system under the current rules.

The FHA said it will continue to increase enforcement on FHA lenders, while publicly reporting lender performance rankings.

“When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history,” said Commissioner David Stevens, in a statement.

Check out this chart from the FHA’s 2009 fiscal year detailing Fico score distribution (it doesn’t look like the new down payment requirement will have any impact, given very few borrowers have scores below 620, let alone 580):

(top photo: davidreece)

Mortgage demand increased for a second straight week as mortgage rates headed back toward record lows, the Mortgage Bankers Association said today.

Home loan application volume was up 9.1 percent on a seasonally adjusted basis for the week ending January 15, but off a startling 52.3 percent (unadjusted) compared with the same week a year ago.

Interestingly, the MBA hadn’t been posting the year-over-year numbers up until this week, so there must be something on the agenda.

The refinance index jumped 10.7 percent compared with the previous week and the seasonally adjusted purchase index saw a 4.4 percent gain.

The unadjusted purchase Index was up 9.8 compared with the previous week, but 19.1 percent lower than the same week one year ago.

The refinance share of mortgage activity increased slightly from 71.5 percent to 71.7 percent of total applications as the mortgage rate picture improved.

The 30-year fixed averaged 5.00 percent even, down from 5.13 percent, while the 15-year fixed slipped to 4.33 percent from 4.45 percent.

The one-year adjustable-rate mortgage also improved, falling to 6.72 percent from 6.83 percent.

The ARM-share of activity increased slightly to 4.1 percent from 4.0 percent of total applications.

The MBA’s weekly survey covers more than half of retail, residential home loan applications, but does not factor out multiple or declined apps, which have surely risen in recent years.

Subpoenas have been served to 15 mortgage companies throughout the country with “significant claim rates” against the FHA mortgage insurance program.

HUD wants the companies to provide documentation and data related to the large number of failed loans that resulted in claims being paid out by the FHA mortgage insurance fund, which as we all know, is on life support.

“The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved,” said HUD Inspector General Kenneth M. Donohue, in a statement.

“We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud.”

The lenders were identified via an analysis of loan data focused on companies with a high number of claims, “certain loan underwriting volume,” and a high ratio of defaults/claims compared to the national average.

“The FHA market share has skyrocketed,” Donohue said. “Our job is oversight. We work for the American taxpayer. Each loan on this list will be thoroughly examined and we will track down the reasons why it failed.”

“Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted we are watching very carefully and that we are poised to take action against bad performers.”

The move is part of a larger initiative to remove bad players from the FHA system; back in December, Lend America was forced to shut its doors after an FHA suspension.

The following companies were served subpoenas today:

First Tennessee Bank N.A., Memphis, TN
Alethes LLC, Lakeway, TX
Security Atlantic Mortgage Co., Edison, NJ
Pine State Mortgage Corporation, Atlanta, GA
Birmingham Bancorp Mortgage Corporation, West Bloomfield, MI
Alacrity Financial Services, LLC, Southlake, TX
Assurity Financial Services, LLC, Englewood, CO
D and R Mortgage Corporation, Farmington, MI
Webster Bank, Cheshire, CT
Mac-Clair Mortgage Corporation, Flint, MI
Americare Investment Group, Inc., Arlington, TX
1st Advantage Mortgage, Lombard, IL
American Sterling Bank, Independence, MO
Sterling National Mortgage Company Inc., Great Neck, NY
Dell Franklin Financial LLC, Columbia, MD

We’re only two weeks into the new year (and decade) and the predictions are flowing…just not the good kind.

The Mortgage Bankers Association said today it expects residential mortgage originations to fall 40 percent in 2010 from last year to their lowest level in a decade.

The group believes banks and mortgage lenders will originate just $1.28 trillion in home loans in 2010, down from $2.11 trillion last year.

The anticipated total would be the lowest since 2000, when a paltry $1.14 trillion was recorded (per Reuters data).

It’s slated to get even worse in 2011, with just $1.22 trillion in home loan lending volume expected, before reversing course and climbing to $1.4 trillion in 2012.

Of course, 2009 threw the numbers way out of whack, thanks to the refinancing bonanza that took place in response to the record low mortgage rates on offer.

Refinancing accounted for roughly 65 percent of total activity last year, but is only forecast to grab a 40 percent share this year.

Perhaps because the MBA sees 30-year mortgage rates increasing throughout the year to end 2010 at a not so desirable 6.1 percent.

Meanwhile, purchase activity will see a less-than five percent rise from 2009, before really taking off in 2011 and 2012.

The news spells trouble for those hired just to handle the surging loan volumes in 2009, as banks will surely need to “rightsize” staff.

More than $47 billion in prime and Alt-A mortgages where borrowers are currently making interest-only payments are set to recast to fully-amortizing payments over the next year, according to Fitch Ratings.

“This recast exposes borrowers to an average payment increase of 15% and possibly higher if interest rates increase,” the company said in a release. “Over the next two years, a total of $80 billion of prime and Alt-A loans, and a total of $50 billion Subprime loans are due to recast.”

The news is worrisome considering the fact that 60-day delinquency rates have risen more than 250% in the 12 months following previous recasts for prime and Alt-A loans.

“While only 3.3% of prime loans are 60 or more days delinquent prior to recast, delinquencies the year after recast increased to 9.3%. Similar effects have been seen in Alt-A and subprime, with delinquencies increasing from 12% to 29% for Alt-A, and from 20% to 58% for subprime.”

Then there’s the negative equity issue, which further exacerbates the situation; essentially many that could avoid a recast by refinancing into low rate mortgages are out of luck.

Fitch said the current loan-to-value (LTV) ratios for prime and Alt-A loans are 118 percent, with 64 percent of borrowers underwater.

Additionally, the vast majority of interest-only loans set to recast are adjustable-rate mortgages, adding to the severity of payment shock.

“Of those IO loans recasting in the next two years, 99% of prime, 94% of Alt-A, and 90% of subprime are ARM loans.”

Oh, and most of these borrowers qualified for the loans based on their ability to make the initial interest-only payments rather than the fully amortized principal and interest payments, often while simply stating income.

(photo: /charlene)

I took a shot at the United States in my previous post when comparing our housing policy to that of China’s, but we may not be the worst, at least in some terms.

In the United Kingdom, more than one million “householders” have used credit cards to pay their mortgage or rent in the past year, according to a new survey from homeless charity Shelter.

Overall, six percent of respondents said they used their credit cards to pay the mortgage or rent, representing over a million households in the UK.

The highest proportion using credit cards to pay the mortgage was the working class, at an eight percent clip; four percent of middle/upper class respondents said they did the same.

In London, one in 12 have turned to plastic to pay their monthly mortgage or rent.

“This is a shocking discovery, that over a million households in Britain are in such desperate circumstances that they need to borrow money on credit cards to pay for basic housing costs,” said Kay Boycott, Shelter’s director of policy and campaigns, in a release.

“If people are already struggling to the extent that they fear losing their home, increasing credit card debt cannot be the answer.”

Paying the mortgage with a credit card doesn’t make a whole lot of sense, considering interest rates tied to credit cards are often well into the double-digits.

Such services typically also require a one-time fee, making the decision all the more troublesome.

Interestingly, CardIt, LLC., a US-based company that allowed homeowners to make mortgage payments via credit card launched just two years, now seems to be defunct.

Not much of a surprise.

I thought this little tidbit illustrated the difference between Chinese and US policy when it comes to housing.

In response to an unhealthy run-up in home prices in some parts of the country, China’s Cabinet recently announced new measures to curb the rise, including larger down payments for second homes.

Among the changes, the Cabinet will now require a whopping 40 percent down payment on new residential mortgages for those who already own a home.

According to the Xinhua news agency, the move is intended to reduce property speculation, increase the supply of low-income housing, and speed up the construction of new residential housing projects.

During the run-up of housing prices here in the states a few years back, scores of banks and mortgage lenders welcomed 100 percent financing on second homes and even investment properties.

Not only that, but one could apply for a mortgage on an investment property with no money down and provide ZERO documentation.  All you needed was a credit score.

Sure the interest rate was astronomical, but the idea was to sell or refinance in a matter of months once the home appreciated by some ridiculous amount.

Of course, the bubble burst and millions of foreclosures sprang up, leaving numerous speculative housing developments vacant while proving to be an ongoing drag on home prices.

Now I’m not saying China is perfect (or close to it), but it’s nice to see a little restraint here and there.

Mortgage rates finally saw some relief after rising for four straight weeks since hitting record lows back in early December, according to mortgage financier Freddie Mac.

The popular 30-year fixed averaged 5.09 percent during the week ending January 7, down from 5.14 percent a week earlier, but slightly above the 5.01 percent average seen a year earlier.

The 15-year fixed fell to 4.50 percent from 4.54 percent, and sits just below the 4.62 percent average seen this time last year.

The five-year adjustable-rate mortgage remained unchanged at 4.44 percent, while the one-year ARM slipped two basis points to 4.31 percent.

A year ago, the five-year stood at 5.49 percent and the one-year averaged 4.95 percent.

“Mortgage rates eased slightly this week after rising consecutively through December,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year.”

“As the economy strengthens further and the Federal Reserve (Fed) decides to raise its overnight target rate, ARM rates will follow suit because they are typically tied to shorter-term interest rates. However, the federal funds futures market does not anticipate any Fed action until the second half of 2010.”

Learn more about how mortgage rates are determined.

The interest rates above are good for conforming loan amounts with a loan to value of 80 percent or less; certain pricing adjustments will raise your actual interest rate.

Jumbo loans continue to price a percentage point or more higher than conforming loans.

The U.S. Department of Housing and Urban Development (HUD) has removed the one percent loan origination fee cap on FHA mortgages originated on or after January 1, 2010, according to a mortgagee letter.

The move is consistent with changes to the Real Estate Settlement Procedures Act (RESPA), as the sum of all fees and charges from origination-related services must now be included in one box on the new Good Faith Estimate (GFE).

HUD assumed the new consolidated figure representing all compensation to the lender and/or mortgage broker for loan origination would likely exceed the specific origination fee caps previously set for government programs.

However, HUD doesn’t believe the rule change will be a free-for-all for lenders and brokers to charge whatever they please going forward.

“FHA expects that lenders will continue to charge fair and reasonable fees for all origination services and the agency will continue to monitor to ensure that FHA borrowers are not overcharged,” the letter said.

“Furthermore, the FHA Commissioner retains the authority to set limits on the amount of any fees that mortgagees charge borrowers for obtaining an FHA loan and the agency does intend to issue additional guidance on the subject.”

In other words, a new cap on the origination fee will likely be set once the dust has settled…likely after an unknown number of borrowers are exploited.

Mortgage demand decreased 22.8 percent on a seasonally adjusted basis during the week ending December 25 before rising a meager 0.5 percent a week later, according to the Mortgage Bankers Association.

On an unadjusted basis, the home loan index plummeted 46.9 percent the week before Christmas and increased 0.4 percent a week after.

While it’s not surprising to see soft demand for mortgage applications during the holiday period, purchase activity was off nearly 30 percent compared with the same period in 2008.

Refinance activity also slipped both weeks, falling 30.5 percent and 1.6 percent, respectively.

That pushed the refinance share of mortgage activity from 75.9 percent to 68.2 percent of applications.

Meanwhile, interest rates closed out 2009 with upward momentum; the popular 30-year fixed, which had slipped to a record low 4.71 percent in early December, climbed to 5.18 percent.

The 15-year fixed, increased from 4.34 percent two weeks ago to 4.62 percent, but remains close to its record low.

The MBA’s weekly survey covers more than half of all retail, residential home loan applications, but does not factor out duplicate or declined apps.

Over the past year, they’ve also removed the year-over-year stats (not sure why), making it difficult to gauge the long-term health of the mortgage market.

I meant to address this earlier, but was held up with the holidays.

AP business writer Rachel Beck wrote a good piece on the lack of permanent loan modifications extended via the Home Affordable Modification Program (HAMP) back on Christmas day.

In order for loan modifications to become permanent, borrowers must provide various paperwork, including income documentation, and demonstrate the ability to make the new payments for three months.

But as of last month, only 31,382 loan modifications had been made permanent, while 697,026 were in trial mode.  Bank of America only completed 98!

That prompted the government to ease the process by extending the trial period for loan modifications, minimize paperwork requirements, and impose monetary penalties and sanctions for loan servicers who failed to do their part.

Most interestingly, however, was a subsequent waiver announced on December 16, which allows those who understated their income by more than 25 percent to continue along in the trial period instead of being rejected immediately.

Yep, those who “fudged the numbers,” either by mistake or perhaps because of other discrepancies, will be given another chance instead of having to start the process over again.

Beck thinks it sends the wrong message, and mirrors the problems that got us here in the first place.

The difference a few years ago is borrowers were overstating income to qualify for the lowest rate (or qualify to begin with), whereas now they’re understating income to take advantage of the lowest monthly payment they can “afford.”

(photo: philosophygeek)

Mortgage rates hit a new record low this week, according to mortgage financier Freddie Mac.

The uber-popular 30-year fixed-rate mortgage averaged 4.71 percent during the week ending December 3, down from 4.78 percent a week earlier and 5.53 percent a year ago.

It’s now at its lowest point since Freddie Mac began tracking back in 1971.

The 15-year fixed fell two basis points to 4.27 percent, well below the 5.77 percent average seen a year ago, and also a new record low that goes all the way back to 1991.

“Interest rates for 30-year and 15-year fixed-rate mortgages fell for the fifth consecutive week to an all-time record low while the average rate on 5-year ARMs hovered near its record set in the previous week,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

“In addition, interest rates on 30-year and 15-year fixed mortgages thus far in 2009 averaged one percentage point below their respective average in 2008.”

Adjustable-rate mortgages were a mixed bag; the five-year ARM increased a single-basis point to 4.19 percent, while the one-year ARM slipped 10 bps to 4.25 percent, its lowest point since June 2005.

A year ago, the five-year was pricing at 5.77 percent and the one-year stood at 5.02 percent.

The interest rates above are good for conforming loan amounts at 80 percent loan-to-value at par; pricing adjustments may increase or decrease the rate you actually receive.

Jumbo loans continue to price a percentage point or more higher than conforming mortgages.

So what do you think, can mortgage rates go any lower, or have we reached bottom?

As a means to boost capital and improve the quality of future loans, the FHA is expected to make a series of major underwriting changes.

The FHA plans to raise the minimum Fico score for new FHA borrowers, though it’s unclear what that three-digit number will be, and if it’ll be dependent on other factors.

“We are currently analyzing what this floor should be, including the relationship between FICO scores and downpayments to determine whether we should increase FICO minimums in combination with changes to other underwriting criteria for lower downpayment loans,” said HUD Secretary Shaun Donovan, in prepared remarks to Congress.

The FHA is also calling for borrowers to have more “skin in the game,” meaning a higher down payment requirement (currently set at 3.5%) will probably be implemented.

Donovan noted in his testimony that the absence of seller-financed downpayment assistance loans would have kept the FHA’s capital ratio above the two percent minimum.

Maximum seller concessions on FHA loans are expected to be reduced from six percent to three percent, as the current above-market level exposes the agency to excess risk by creating incentives to inflate appraised values.

Additionally, the FHA has requested authority from Congress to raise the annual mortgage insurance premium it charges borrowers to protect against future uncertainty in the mortgage market.

Those who originate FHA loans will also be held to a higher standard, with plans to post a “Lender Scorecard” on the HUD website to ensure transparency and accountability (higher net-worth requirements were previously announced).

The agency will also continue to step up enforcement efforts; they’ve already suspended seven lenders, including Taylor, Bean, and Whitaker, and most recently Lend America, and have withdrawn FHA-approval for 270 others.

The FHA currently insures nearly 30 percent of purchases and 20 percent of refinances in the residential mortgage market, so the decisions they make are critical.

More details regarding the changes are expected by the end of January.

I just got to thinking.  Last year, mortgage financing heavyweights Fannie Mae and Freddie Mac implemented a foreclosure moratorium during the holidays (so did ING).

The agencies vowed to suspend all foreclosure sales and evictions of owner-occupied homes from November 26 until January 9, though the move was tied to the implementation of the Streamlined Modification Program (remember that thing).

Freddie Mac expected to suspend some 6,000 foreclosure sales scheduled between those dates, while Fannie’s figure was closer to 10,000.

This year, all the programs envisioned and created to prevent avoidable foreclosures seem to be in place, so any new moratorium would be more about politics than anything else.

But it would be a nice gesture to keep homeowners in place during the holidays, considering all the shoddy stuff banks and lenders have been involved in throughout the mortgage crisis.

It’ll be interesting to see if any of the major players step up in the coming weeks, though we are getting dangerously close to the New Year, so there’s no guarantee.

There’s also the question of whether moratoria simply exacerbate and prolong the problem by keeping unfit borrowers in homes they can’t afford, though allowing them to stick around during what can be a tough time of the year doesn’t seem to be asking a lot.

Earlier this week, loan servicers participating in the Making Home Affordable program were told they could face monetary penalties and sanctions if they fail to meet performance obligations, so perhaps a moratorium could take the heat off.

Home loan application volume eked out a seasonally adjusted 2.1 percent week-to-week gain during the holiday-shortened week ending November 27, according to the Mortgage Bankers Association.

On an unadjusted basis, the application index was off 29.3 compared with one week earlier, though clearly Americans were more interested in their turkey and cranberry sauce than applying for a refinance.

Speaking of, the refinance index slipped 1.7 percent compared with the prior week, while purchase activity increased 4.1 percent (that includes the Thanksgiving adjustment).

The unadjusted purchase index plummeted 30.4 percent compared with the previous week and was off 34.9 percent compared to the same period a year ago.

The refinance share of mortgage activity increased to 72.1 percent of total applications from 71.7 percent, thanks to record low mortgage rates.

The 30-year fixed slipped to its lowest point since May 15, falling to 4.79 percent from 4.82 percent a week earlier.

Meanwhile, the 15-year fixed shed five basis points to average 4.27 percent, the lowest the mortgage has ever been since the MBA began tracking back in 1990.

Finally, the one-year adjustable-rate mortgage averaged 6.56 percent, down from 6.66 percent a week earlier, making it quite unattractive compared to fixed-rate options.

That may explain why the ARM-share of applications dropped to 4.8 percent of total activity from 5.3 percent a week prior.

The weekly MBA survey covers more than half of all retail, residential home loan applications, but does not factor out declined/multiple apps.

Lend America, a nationwide mortgage provider, has shut down operations, according to an advisory posted on its website.

The former lender wrote, “Effective immediately the company has ceased it loan origination and operations. The company will continue to operate to fulfill its obligations to past and current borrowers, FNMA, GNMA and the regulatory agencies.”

Back in late October, the company was accused of multiple origination and underwriting violations by the HUD Mortgagee Review Board.

Offenses included submitting false certifications from borrowers, approving loans that didn’t meet credit requirements, failing to document income and asset information, omitting liabilities from underwriting analyses, and charging excessive mortgage broker fees.

At the time, the U.S. Attorney for the Eastern District of New York also sought a temporary restraining order against the company’s parent “Ideal Mortgage Bankers,” intended to prevent them from originating any new FHA loans while federal prosecutors pursued a civil fraud injunction.

Sadly, Lend America had referred to itself as “the authority on FHA financing” prior to the complaints and subsequent suspension.

There’s a good chance you’ve seen the company’s commercials on national television, which were designed to look like breaking news stories masked in a CNN-style template.

The Melville, NY-based company provided residential mortgages direct to consumers for the past 20 years and apparently had a 600-strong workforce, whose fate is unknown.

Lend America had been planning a foray into wholesale lending before the investigation got underway back in October.

Exciting Tuesday mortgage Q&A: “How does foreclosure affect your credit?”

Credit questions are never black and white, mainly because every consumer has a unique credit profile, making it impossible to pinpoint credit scoring impact.

But Fico released some interesting data about the effect of a foreclosure on different types of consumers’ credit scores, shedding a little light on an often disputed topic.

The company looked at two different credit profiles, one average (680 Fico score) and one excellent (780 Fico score) to detail how foreclosure would affect your credit.

Borrower A: 680 Fico score
Borrower B: 780 Fico score

Despite the two consumers having initial Fico scores that were 100 points apart, post-foreclosure, those scores would only differ by about 50 points.

Borrower A would see their credit score fall to 575-595, while borrower B would see it slip somewhere between 620-640.

You may be wondering why borrower B would take a bigger hit for the same derogatory event; simply because borrower A’s 680 score already reflects past risky behavior, so it’s factored in.

And though the gap would narrow between the two consumers, borrower A would fall into subprime status (below 620), while borrower B would still have a credit score in what some call the Alt-A realm.

Of course, both borrowers would be subject to the same rules with regard to obtaining a mortgage post-foreclosure (how long after foreclosure can I purchase a home?).

Private mortgage insurance volume slipped for the fourth straight month in October, with just $4.8 billion in new insurance written, according to the Mortgage Insurance Companies of America (MICA).

During the month, 24,339 borrowers used private mortgage insurance to purchase or refinance a home, up from 22,710 a month earlier, but nowhere close to the 42,167 a year ago.

Applications received were also up month-to-month, 31,880 compared to 30,221 in September, but again far from the 55,085 seen in October 2008.

Meanwhile, primary insurance defaults held steady at 91,135, beating last year’s total of 80,071.

“Mortgage insurers continue to pay claims as they come due and aid the economic recovery by helping troubled borrowers keep their homes and prevent foreclosures,” said Suzanne C. Hutchinson, Executive Vice President of MICA.

“In the first three quarters of 2009, mortgage insurers completed more than 145,000 loan workouts.”

Unfortunately, cures (where previously delinquent loans become current) slipped lower during the month, totaling 51,920, down from 59,750 a month earlier.

In the past year and change, mortgage insurers have tightened requirements to limits losses going forward, slashing loan-to-value (LTV) limits and upping credit score requirements.

Private mortgage insurance is generally required on first mortgages with a LTV exceeding 80 percent.

(photo: robertthomson)

Some interesting tidbits from a housing symposium held earlier this month involving representatives from Amherst Securities and mortgage insurance company Genworth:

Genworth President Kevin D. Schneider said a mortgage with a 0% down payment defaults three times more often than a mortgage with a 10 percent down payment.

All the more reason for the FHA to consider a larger minimum down payment, currently set at just 3.5 percent (there is currently legislation pushing for five percent).

Schneider also noted that interest-only mortgages were 3.7 times more likely to default than standard mortgages, while option-arms were 8.8 times more likely to default.

Laurie Goodman, a Senior Managing Director at Amherst Securities, said home prices have 8-10 percent further downside, adding that the housing overhang is “very substantial.”

As a result, even after home prices trough, they are expected to remain flat for “a long period of time” while up to seven million housing units eventually liquidate.

Higher priced homes may see more potential price downside thanks to limited non-agency (jumbo) loan origination.

Goodman also noted that cure rates, when a delinquent mortgage becomes current again, were low and the higher the loan-to-value, the greater the chance of default.

The data supports the argument that home price depreciation is the leading cause of default, not unemployment, an issue lenders and servicers must come to grips with if they want to prevent more foreclosures.

Bank of America mortgage president Barbara Desoer saw her salary cut to just $500,000 from $800,000 after a review from U.S. Treasury pay czar Kenneth Feinberg.

The Charlotte-based bank and mortgage lender revealed the move in a SEC filing; CFO Joe Price saw his salary slashed similarly.

Of course, the pair will still receive millions in stock-based compensation for 2009, with Price expected to reap $5.25 million and Desoer $3.95 million as soon as Bank of America repays the more than $45 billion it received via TARP last year.

Bank of America also agreed to limit executive perks that Feinberg had previously called for, limiting top executives’ benefits to no more than $25,000 per year.

Anything over that amount will be quickly repaid to avoid any backlash from critics, the media, and the general pubic.

Last year, Desoer received more than $2.6 million in “extra benefits,” including $1.5 million in relocation expenses to fund her move from Charlotte, North Carolina to luxurious Calabasas, California.

That included the purchase of a new residence, including a mortgage subsidy and funds to cover closing costs.

Desoer, the former Chief Technology and Operations Officer for Bank of America, has been in charge of transferring Countrywide’s extensive mortgage business post-merger.

Price played a key role in the bank’s controversial purchase of Merrill Lynch last year.

A staggering 14.41 percent of all residential mortgages were either delinquent or in some stage of foreclosure as of the end of the third quarter, according to the latest survey from the Mortgage Bankers Association.

The delinquency rate (at least one month behind) rose to 9.94 percent from 8.86 percent a quarter earlier, while the foreclosure rate climbed to 4.47 percent from 4.30 percent in the second quarter and 2.97 percent last year.

The combination of loans either in foreclosure or behind on payments was the highest ever recorded by the MBA.

“The percentages of loans 90 days or more past due, loans in foreclosure, and foreclosures started all set new record highs,” the MBA said.

“The percentage of loans 30 days past due is still below the record set in the second quarter of 1985.”

Stay tuned for that…

The MBA noted that the increases in both delinquency and foreclosure starts have been driven by prime fixed-rate loans and FHA loans, as opposed to subprime loans early on in the crisis, thanks to increasing levels of unemployment.

Interestingly, prime adjustable-rate mortgages (which include pay option arms) are now performing worse than subprime fixed-rate loans.

“The foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding,” said Jay Brinkmann, MBA’s Chief Economist.

“The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages.”

Going forward, the MBA expects delinquency and foreclosure rates to get worse before they get better, especially with over four million loans late or in foreclosure (shadow inventory), exceeding the 3.9 million new and previously occupied homes currently for sale.

Mortgage rates fell for a third consecutive week, pushing the 15-year fixed to its lowest point ever recorded, according to the latest survey from mortgage financier Freddie Mac.

The 15-year fixed slipped to a record low 4.32 percent from 4.40 percent, and now sits well below the 5.73 percent average seen this time last year.

The popular 30-year fixed also neared its record low, averaging 4.83 percent during the week ending November 19, down from 4.91 percent a week earlier and 6.04 percent a year ago.

It hasn’t been lower since falling to 4.78 percent back in early April of this year.

The five-year adjustable-rate mortgage fell 10 basis points to 4.25 percent, and is nowhere close to the 5.87 percent average of a year ago.

The one-year ARM got in on the fun as well, falling to 4.35 percent from 4.47 percent, and handily beating its year-ago average of 5.29 percent.

“Interest rate on 30-year fixed-rate mortgage loans fell for the third consecutive week to the lowest since the week ending May 21st, while 15-year fixed rates were the lowest since our records began in 1991,” said Frank Nothaft, Freddie Mac vice president and chief economist.

“Low fixed rates throughout the third quarter prompted an estimated $1.1 trillion in refinancing activity, saving homeowners about $10 billion in aggregate monthly payments over the first 12 months of their new loan.”

The interest rates quoted above are good for conforming loan amounts at a loan-to-value of 80 percent.

Keep in mind that other mortgage pricing adjustments may increase or decrease the actual interest rate you receive; and jumbo loans continue to price a percentage point or more higher than conforming loans.

Comptroller of the Currency John C. Dugan today called on regulators around the world to adopt minimum mortgage standards to address the ongoing mortgage crisis.

He noted that each country has its own “unique credit culture” and “different approaches to mortgage financing,” but that every country should establish a set of standards and periodically report on their performance.

In the United States, he believes three underwriting standards should be mandated, including verification of income and assets, meaningful down payments, and qualifying borrowers on the fully indexed interest rates tied to the mortgages they choose, not just the initial teaser rates.

That means no more stated income loans, no doc loans, no-money down mortgages, and other non-traditional home loans.

With regard to stated loans, he said, “Regulators should consider prohibiting this practice except in very, very limited circumstances where it clearly can be justified.”

And added that homeowners were much more likely to walk away from their mortgages if they had no skin in the game (amen).

Oh, and option arms should have no place in the new mortgage framework.

“We also should generally prohibit the lowering of monthly payments through so-called ‘negative amortization‘ mortgages, which have performed terribly,” Dugan added.

“These mortgages lowered initial monthly payments by allowing borrowers not to pay the full amount of interest due, with the unpaid interest added to the principal balance of the loan. Borrowers should not be allowed to dig deeper into debt with each monthly payment.”

These types of loans worked great when home prices were appreciating, but once home prices shifted direction, negative equity piled up quick.

Finally, Dugan noted that any new mortgage regulations should be applied to all loan providers to prevent any inequity in the space, meaning one group like mortgage brokers wouldn’t bear the brunt of all the changes.

(photo: woodleywonderworks)

I guess it’s official now; FHA lending is bad, bad news.

I mean, we’ve known for a while that FHA lending replaced subprime lending, with its no or low down payment and minimum credit score requirements.

And last week we saw the FHA’s capital ratio fall to just 0.53 percent, well below the Congressionally mandated two-percent minimum, thanks to its increased role in the home lending space and steadily rising defaults.

But when one of the nation’s largest home builders comes out and says something is crap, that’s when you know it’s bad, really, really bad.

Robert Toll, CEO of Toll Brothers, said today at a New York home builders conference that FHA lending could create another huge crisis in the mortgage industry, referring to it as “yesterday’s subprime.”

He also went as far as calling it a “definite train wreck,” noting that a “flag will go up in the next couple of months” for bail out money.

Of course, FHA boss Shaun Donovan said last week that the FHA has $31 billion in reserves to protect itself, representing 4.5 percent of total insurance in force.

And they’re working on policy changes to make it more difficult for unscrupulous lenders to originate bad loans.

But with 456,000 FHA loans in default, or 8.2 percent as of September, you have to wonder if we’ve got another huge bailout on our hands.

Especially when an interested party that likely relied on FHA lending to support its business is saying it’s all coming crashing down.

So much for the extension of the first-time home buyer tax credit…

Last week, applications to purchase a home hit their lowest point since November 1997 after falling for the sixth consecutive week, according to the latest survey from the Mortgage Bankers Association.

The latest weekly decline was 4.7 percent on a seasonally adjusted basis, accompanied by a 1.4 percent decrease in refinance applications.

The unadjusted purchase index was off 7.9 percent compared to one week earlier and 14.7 percent compared to the same week last year.

Overall, mortgage applications were off 2.5 percent on a seasonally adjusted basis (-3.3 percent unadjusted) for the week ending November 13 compared to one week earlier.

The refinance share of mortgage activity increased to 72.9 percent of total applications, up from 71.5 percent a week earlier; that’s the highest share since May 15.

Meanwhile, interest rates continued to trickle lower, with the 30-year fixed slipping to 4.83 percent from 4.90 percent, and the 15-year fixed averaging 4.32 percent, down a single basis point from a week earlier.

The one-year adjustable-rate mortgage decreased to 6.82 percent from 6.85 percent, but still greatly exceeds fixed-rate options, which explains why ARMs only accounted for 5.4 percent of total applications.

The MBA’s weekly survey covers more than half of retail, residential home loan applications, but does not factor out multiple or declined apps.

The FHA’s “capital reserve ratio” fell to 0.53 percent of total insurance in force, well below the two-percent Congressionally mandated minimum, according to a release from HUD.

An independent audit revealed that the capital ratio fell from three percent in the fall of 2008, reflecting “difficult conditions in the housing market,” though the FHA’s expanded role in the home loan financing market was likely to blame.

That’s evidenced by the fact that nearly half of all first-time homebuyers used an FHA loan to obtain financing in the second quarter of 2009.

While their promotion of first-time buyers may be seen as a positive, the fact that the average Fico score for borrowers increased to 693 from 633 two years ago tells you that a whole different, unintended group is taking advantage of the FHA.

“FHA is playing a critical role in restoring health to the housing market by helping working families access mortgage finance when private capital is tight,” said Secretary Donovan, in a statement.

“This is a temporary role which FHA has played in previous economic downturns. The Administration is committed to ensuring that the FHA steps back as private capital returns to the market.”

Donovan also stressed that the FHA has $31 billion in total reserves, or 4.5 percent of total insurance in force, if you consider funds in its financing account.

The FHA announced a number of policy changes a few months back that will take effect on January 1, including closer supervision of its business partners.

Additionally, Donovan introduced Robert Ryan as the agency’s new Chief Risk Officer today, the first-ever in the FHA’s long history.

In order to remain a viable entity going forward, the FHA may tighten its grip on those it does business with, assuming higher net worth requirements are put into place and its approval process is updated.

(photo: eflon)

Mortgage rates fell to their lowest point in five weeks as the popular 30-year fixed kept below five percent for five of the past seven weeks, according to mortgage financier Freddie Mac.

The benchmark mortgage averaged 4.91 percent during the week ending November 12, down from 4.98 percent last week and 6.14 percent a year ago, keeping refinancing attractive for most homeowners.

The 15-year fixed slipped four basis points week-to-week to average 4.36 percent, and is well below the 5.81 percent average seen a year earlier.

The five-year adjustable-rate mortgage averaged 4.29 percent, down from 4.35 percent a week ago and 5.98 percent last year.

Finally, the one-year ARM averaged 4.46 percent, a single basis point better than the 4.47 percent average of last week, but nearly a point lower than the 5.33 percent average of one year earlier.

The interest rates above are good for mortgages with a conforming loan amount with at least a 20 percent down payment (80 percent loan-to-value).

The actual rate you receive may differ greatly as a result of various pricing adjustments; the 30-year also requires 0.7 mortgage points to obtain the rate, while the rest require 0.6 mortgage points.

Jumbo mortgages continue to price at least a percentage point higher than conforming loans and are accompanied with more conservative guidelines.

Mortgage application volume increased 3.2 percent on a seasonally adjusted basis (2.8 percent unadjusted) for the week ending November 6, according to the latest weekly survey from the Mortgage Bankers Association.

Fortunately, interest rates have remained low enough to support refinancing, as the associated index jumped 11.3 percent compared with one week earlier.

Unfortunately, the seasonally adjusted purchase index slipped 11.7 percent to its lowest point since  December 2000!

The unadjusted purchase index fell 13.7 percent compared with the previous week and was 21.6 percent lower than the same week a year ago.

I guess this is the big argument for the extension of the homebuyer tax credit, and probably the one time the MBA had no problem pointing out some very weak numbers.

The refinance share of mortgage activity increased to 71.5 percent of total applications from 66.1 percent a week earlier, the highest share since May of this year.

The popular 30-year fixed averaged 4.90 percent, down from 4.97 percent, its lowest point since May when it stood at 4.69 percent.

The 15-year fixed remained unchanged at 4.33 percent, while the one-year adjustable-rate mortgage climbed two basis points to 6.85 percent.

The ARM-share of total mortgage activity decreased to 5.5 percent of applications from 6.1 percent a week earlier.

The MBA’s weekly survey, conducted since 1990, covers more than half of all retail, residential mortgage applications, but does not factor out multiple or declined apps.

A staggering 22 percent of all mortgages in the state of Florida are non-current, according to a new report from Lender Processing Services.

By non-current, they mean loans that are either delinquent or in some stage of foreclosure; perhaps more troubling is the fact that 10.4 percent of home loans in Florida are in foreclosure.

The LPS October Mortgage Monitor also revealed that the nation’s foreclosure rate was 3.12 percent as of September 30, up 2.6 percent from a month earlier and 88.9 percent year-over-year.

And remember that’s with all the government intervention, foreclosure moratoria, loan modifications, and the like; the national mortgage delinquency rate was 9.37 percent as of September 30.

The report also highlights the large shadow inventory of foreclosed properties that could wreak havoc on home prices and a possible housing recovery.

“The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline,” the company said.

“Nearly one-third of foreclosures remain in pre-sale status after 12 months – twice as many as the year prior. The six-month average deterioration ratio has risen the past two months to 300 percent, showing that for every loan that improves in status, three more deteriorate further.”

The only bit of good news in the report was increased loan production, with year-to-date 2009 loan totals of 2,032,973 (28 percent FHA) versus 1,903,723 (16 percent FHA) for the same period in 2008.

(photo: moe)

The number of trial loan modifications extended via the Making Home Affordable program slipped past 650,000 in October, according to a data release from the Treasury today.

That’s up from 487,081 in September and 386,865 in August; another 919,965 trial period plans have been offered to struggling homeowners.

In total, 2,776,740 requests for financial information have been sent to borrowers since HAMP got underway.

California has led the nation in active trial loan modifications with 134,609, followed by Florida with 82,614 and Arizona with 34,424.

The fewest number were completed in North Dakota, just 170, only bettered by South Dakota’s 324 and Wyoming’s 352, though these states clearly have minimal foreclosure concerns.

“As this report demonstrates, struggling homeowners in every state now benefit from reduced monthly mortgage payments and have an opportunity to stay in their homes,” said Treasury Assistant Secretary Michael S. Barr, in a statement.

“The program is having a pronounced impact in areas particularly hard hit by the housing crisis. We’re reaching borrowers at a larger scale than any other modification program to date, but there is still much more work to be done.”

Saxon was the top loan servicer in terms of active trial modifications as a share of estimated 60+ day delinquencies at 44 percent, followed by CitiMortgage at 40 percent and GMAC at 35 percent.

That compares to just 13 percent at OneWest (formerly IndyMac), 14 percent at Bank of America, and 29 percent at Wells Fargo, the latter two being the top mortgage lenders through 2009.

Roughly 85% of eligible mortgage debt outstanding is covered by HAMP participating loan servicers.