Entries in Mortgages (24)


CFPB Unveils New Mortgage Rules to Protect Borrowers

Digital Vision/Thinkstock(WASHINGTON) -- The Consumer Financial Protection Bureau (CFPB) announced on Thursday new rules for mortgages designed to protect consumers and banks from the kind of lending that contributed to the 2008 housing collapse.

The new rules, which will go into effect next year, say people who want to buy houses have to prove they have the ability to repay their mortgages, providing complete financial information banks can verify.

"Lenders must look at a consumer’s financial information" and "evaluate and conclude that the borrower can repay the loan," the CFPB said in a statement.

"Lenders can’t base their evaluation of a consumer’s ability to repay on teaser rates.  Lenders will have to determine the consumer’s ability to repay both the principal and the interest over the long term -- not just during an introductory period when the rate may be lower," the agency added.

Lenders will have to offer loans that don't trap home buyers.  That means no more excessive points and fees, and no more "toxic" loan features like interest-only payments or negative-amortization payments that drive up the principal amount.

How much of a borrower's income can go towards paying a mortgage will also be taken into consideration.

"Qualified Mortgages generally will be provided to people who have debt-to-income ratios less than or equal to 43 percent.  This requirement helps ensure consumers are only getting what they can likely afford," the CFPB said.

The agency says under these rules borrowers won't be set up to fail and banks will be protected against lawsuits over bad lending practices.

Copyright 2013 ABC News Radio


Delinquent Mortgage Payments Down to Three-Year Low

Hemera Technologies/Thinkstock(NEW YORK) -- More American homeowners are staying on top of their mortgage payments, according to a new report from TransUnion.

The credit reporting firms says just over one in 20 homeowners -- 5.49 percent -- were at least 60 days behind with their mortgage payments during the spring quarter.  That marks the lowest level in three years.

The number is still well above levels seen before the housing bust, but the report is another sign of improvement this year for the struggling housing market.  

Home prices are now rising in most parts of the country.  Mortgage firm Freddie Mac says second-quarter prices rose nearly five percent compared in the first three months of this year.

Copyright 2012 ABC News Radio


Housing Revival: Fewer Homes Underwater

Creatas/Thinkstock(NEW YORK) -- For the first time since the deep slump began more than five years ago, a new report from the business information and analytics firm Core Logic says fewer Americans have negative equity in their homes.

In the first three months of the year, 11.4 million homeowners, or 23.7 percent of all residential properties with a mortgage, had negative equity.  That compares with 12.1 million properties -- 25.2 percent -- in the fourth quarter of 2011.

Mark Fleming, chief economist at Core Logic, says, “More than 700,000 households have regained buoyancy.”  They’re no longer underwater, and “one of the main reasons why we’ve seen the improvement in negative equity is that house prices have risen.”

Core Logic finds prices have increased most in some deeply distressed housing markets in the West and South, including parts of Florida, Arizona and Nevada.

“In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative equity share,” says Fleming.

Copyright 2012 ABC News Radio


Report: Countrywide Gave Discounted Home Loans to Capitol Hill Insiders

Digital Vision/Thinkstock(WASHINGTON) -- A House committee report on the now-defunct subprime lender Countrywide Financial Corporation shows the company tried to win and influence friends in Washington by arranging discounted home loans for some members of Congress, as well as congressional aides and government officials.

The House Oversight and Government Reform Committee reviewed more than 60,000 pages of documents and discovered Countrywide’s special VIP unit arranged discounted loans for a half-dozen current or former members of Congress, key aides and certain government officials.

Congressional investigators say there was no specific favor sought or granted in exchange for the discounted home loans, but Countywide did gain influence on Capitol Hill.  The report shows many of the recipients of the special mortgages were linked to several financial reform proposals that, had they passed, would have prevented some of the issues that led to the collapse of the housing market.

Former Countywide chief executive Angelo Mozillo was never sent to prison for violating federal law, but he did agree to pay $67 million in penalties and never again be involved in running a publicly-traded company.

While Countrywide was giving politicians and other Washington insiders VIP treatment, it was providing just the opposite to average Americans.  A government study in 2010 found that Countrywide improperly imposed fees on people who were late on mortgage payments and were in default.

In 2011, Bank of America, which had acquired Countrywide three years earlier, agreed to pay $335 million to settle charges that Countrywide discriminated against blacks and Hispanics seeking to buy homes between 2004 and 2008.  The Justice Department said at the time that Countrywide regularly charged minorities higher fees and interest rates while steering borrowers into risky subprime mortgages, a major factor in the collapse of the housing market.

Copyright 2012 ABC News Radio


Mortgage Rates: Another Record Low

Zoonar/Thinkstock(WASHINGTON) -- Average fixed mortgage rates continued to fall to all-time record lows amid stalled consumer spending and manufacturing activity, government-sponsored Freddie Mac reported today.

The 30-year fixed-rate mortgage averaged 3.62 percent for the week ending July 5, down from last week’s 3.66 percent. Last year, at this time it was 4.6 percent.

The 15-year fixed-rate mortgage averaged 2.89 percent, down from last week when it was 2.94 percent. Last year, the 15-year mortgage rate was 3.75 percent.

“Recent economic data releases of less consumer spending and a contraction in the manufacturing industry drove long-term Treasury bond yields lower over the week and allowed fixed mortgage rates to hit new all-time record lows,” said Frank Nothaft, Freddie Mac vice president and chief economist.

In the final first quarter estimates for GDP, growth in personal expenditures was revised downward to an annualized rate of 2.5 percent. Monthly consumer spending in April was revised to 0.1 percent from a 0.3 percent gain and was unchanged in May.

The Institute for Supply Management reported that manufacturing shrank in June, the first decline since July 2009.

Copyright 2012 ABC News Radio


Mortgage Delinquencies Are Falling

iStockPhoto/Thinkstock(NEW YORK) -- According to a new report from the Office of the Comptroller of the Currency, fewer mortgages were delinquent in the first quarter of 2012 than at any time since the first quarter of 2008.

The OCC Mortgage Metrics Report finds the number of newly-initiated foreclosures fell 8 percent compared with a year ago. Some 88.9 percent of first-lien residential mortgages are current and performing.

The percentage of mortgages seriously delinquent (4.5 percent) dropped 10.4 percent from the previous quarter, and 6.2 percent from a year ago.

The findings are based not on a random sample of all mortgages, but on data provided by 9 selected banks that together hold some 60 percent of first-lien mortgages. Their combined portfolio contains 31 million loans totaling $5.3 trillion in principal.

The improvements, says the OCC report, are due partly to the strengthening economy, but also to an increased use of home retention loan modification programs.

During the first quarter of 2012, “Nearly twice as many new home retention actions–loan modifications, trial-period plans, and payment plans” were initiated than were “completed foreclosures, short sales, and deed-in-lieu-of-foreclosure transactions,” according to the report.

Only 10.2 percent of loan modifications involved principal reductions; eight times as many involved interest rate reductions. The average monthly decrease in loan payments (for borrowers who qualified for modification) was $437.

Modifications that reduced monthly payments by 10 percent or more performed better than those that reduced payments by less. The report found, not surprisingly, that the greater the decrease in monthly payments, the better the subsequent performance.

In all, says the report, loan servicers implemented 352,989 new home retention actions during the quarter–a decrease of 23.3 percent from the quarter before and 36.7 percent from a year earlier.

The OCC attributed the drop in newly-initiated foreclosures to “servicers’ ongoing emphasis on modifications and other loss mitigation programs, a declining number of seriously delinquent mortgages, and slower initiation of new foreclosure referrals.”

Copyright 2012 ABC News Radio


Mortgage Rates Plummet to New Records

Digital Vision/Thinkstock(NEW YORK) -- If you can get a new mortgage or refinance an existing one, interest rates have fallen to incredible new lows.

For the first time ever, interest on a 15-year loan has dropped below 3 percent, according to data from Freddie Mac.  The rate is down to 2.97 percent this week from 3.04 percent last week.

The average rate on the 30-year loan also hit a new low, falling to 3.75 percent from last week's 3.78 percent.  The figure is the lowest since long-term mortgages began six decades ago.

If the economy doesn’t fall apart in other ways, these low rates may help the housing market as we are now in buying season.

Copyright 2012 ABC News Radio


Many Americans with Mortgages Still Underwater

Hemera/Thinkstock(WASHINGTON) -- Nearly a third of homeowners with a mortgage are underwater, according to a new report, owing more on their loans than their properties are worth.

"It's been a very wrenching housing recession so it's not something that in one time period we're going to get past," says economist Stan Humphries at the real estate firm Zillow.

Nearly 16 million homeowners across the country are underwater with their mortgages. And some cities are in much worse shape than others.

"If you look at markets like [Las] Vegas or Phoenix you're seeing much higher levels of negative equity," Humphries said.

In several cities, 50 percent of homeowners owe more than their properties are worth.

Copyright 2012 ABC News Radio


Obama Claims Credit for Refinancing Surge; Critics Doubt Policies’ Role, Impact

Official White House Photo by Pete Souza(RENO, Nev.) -- After two days with his same-sex marriage position in the spotlight, President Obama Friday sought to shift focus back to the economy, visiting a neighborhood hit hard by the housing crisis, to claim success at helping struggling homeowners and call on Congress to do more.

Standing in the driveway of a home whose owners had recently refinanced their underwater mortgage, Obama credited rule changes for government-backed loans that he imposed six months ago with allowing more Americans to benefit from historically low interest rates.

“Since I’ve made this announcement, refinancing applications have gone up by 50 percent nationwide and 230 percent here in Nevada alone.  That’s the good news,” Obama said. “People are taking advantage of this. That’s what we want to see.”

He also called on Congress to enact legislation that would allow more homeowners, not just those with government-backed loans, to refinance.

“I’m calling on Congress to give every responsible homeowner a chance to save an average of $3,000 a year by refinancing their mortgage,” Obama said. “It’s a simple idea, it makes great sense, and I know it will have an impact.”

Obama met with homeowners Val and Paul Keller before his remarks.  The couple had previously not been able to refinance their $168,000 mortgage, which they’d held for 14 years, despite keeping up with monthly payments.

Thanks to changes implemented by the administration six months ago, the Kellers were able to refinance last year, saving them $240 a month.

“The reason the Kellers were able to refinance is because the only thing that we could do without congressional action was to give opportunities for refinancing for folks with a government-backed loan, an FHA-backed loan,” he said. “But in order to expand that opportunity -- we want to include everybody, people whose mortgages aren’t government-backed -- we’ve got to have Congress move.”

But while Obama sought to claim credit for a surge in refinancing, it’s unclear how much of the influx in applications is directly attributable to his policy changes, which applied only to a select group of homeowners, versus average Americans just trying to take advantage of lower rates.

Moreover, as his critics note, it’s unclear whether the majority of those applications have been approved by lenders and therefore have resulted in savings for homeowners.

“How many people in Nevada fit the profile of the Kellers that actually got help and are a success story?” questioned U.S. Rep. Mark Amodei, R-Nev., who is a supporter of Mitt Romney.

“So to come in here and ask people to ignore that and say, I’m going to sit in the home of some folks that it’s actually helped, is like, Hey, congratulations for finding some of those folks,” he said on a conference call with reporters.

“But if you think the answer is a continued government refinancing deal to the ignorance of the economy and western Nevada, I quite simply disagree with your philosophy and I’m talking to the president here,” he said.

Neither the administration nor the Mortgage Bankers Association, which tracks the data, could say how many homeowners have been able to refinance under the new rules implemented in October. And experts conceded that more applications do not necessarily translate to lower rates.

In October, during a visit to Las Vegas, Obama announced a series of administrative changes spearheaded by the Federal Housing Finance Agency that have allowed select homeowners whose mortgages are backed by Fannie Mae and Freddie Mac, who have good credit and no late payments in the last six months to refinance without getting a new appraisal or full credit check.

The FHFA estimated at the time that the initiative could help thousands of homeowners.

The administration says the costs and “red tape” to refinancing remain prohibitively high, particularly for non-government-backed mortgages, and is now pushing legislation to expand the reforms to the broader housing market as part of its “to do list” for Congress.

Copyright 2012 ABC News Radio


Mortgage Rates Fall to Another Record Low

Digital Vision/Thinkstock(WASHINGTON) -- Another week and another record low for mortgage rates. The average rate for a 30-year fixed loan fell to 3.83 percent in the week ended Thursday, Freddie Mac said in a statement.

The average 15-year rate fell to 3.05 percent, another record low, from 3.07 percent.

These low mortgage rates haven’t done much to help the ailing housing market, however. Prices in many areas of the county are still one-third or more below the highs reached before the financial meltdown of 2008. On Wednesday, the National Association of Realtors reported that prices for single-family houses were up in the first quarter in 74 of 146 metro areas, an encouraging sign.

Some 2.37 million homes were for sale at the end of March, 22 percent fewer than a year earlier, and home sales rose 5.3 percent in the first quarter.

The record-low rates are elusive for many Americans because of tighter lending standards and the fact that more than one in five homeowners owe more on their mortgages than what their properties are worth. That makes it impossible to refinance or sell without writing a check to the bank.

Copyright 2012 ABC News Radio

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