Rate on 30-year home mortgage drops to record 3.88%

January 19, 2012 by · Leave a Comment
Filed under: Real Estate News 

This is great news if you have solid employment, 20% down payment range and good credit.   My from perspective we can have 1% mortgages rates and 100K average home prices and it won’t matter.   People need jobs and income that support these types of debt service levels.  Rates will continue to fall until the market finds a rate the works for our current economic situation.  With more jobs being sent overseas and income stay flat if not declining, I see these rates going even lower.

In the end, it comes back to what I have been writing on Bank REO from the beginning.   We have a debt problem and that will need to be handled in the only manner that people like Walter Bagehot wrote in his seminal book “Lombard  Street”.  You extend credit the the “solvent” banking institutions and let the insolvent banks fail so you can clear the market of the “bad money” as Gresham put it.   Bad money always chases good money out of the market until it is brought out of the market.

What I am saying is that most of our major banks are carrying loans and mortgage on their books that will never be paid off and they need to be written off and at that point you need to increase capital to cover these losses or go out of business (or be acquired).   You would be surprise how quickly we would bounce back if we flushed this debt from the system and started hardcore on re-balancing our major entitlement programs.    If you think that we need these large banks, think about how many regional banks we have that would be able to meet this demand and if that wasn’t enough, I think there might be a few billionaires that would throw their proverbial hat in the ring to make good loans.

We say we want free-markets and capitalism but reject the most important part, letting companies fail no matter what.  Banks will always be needed so we should not worry that they will disappear.   If you agree or not leave comments below and please call your representative.

ABC News & AP – The average rate on the 30-year fixed mortgage fell again this week to a record low. The eighth record low in a year is attracting few takers because most who can afford to buy or refinance have already done so.  Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage dipped to 3.88 percent this week, down from the old record of 3.89 percent one week ago.

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FTC moves against mortgage modification and foreclosure relief scams

June 18, 2010 by · Leave a Comment
Filed under: Legal News 

We should be glad to see the FTC stepping up and doing its job against fraudsters of all kind.  Today in other news, the Attorney General’s office is cracking down on companies that have been committing mortgage fraud.  We have to persecute any and all wrong doing in this crisis or we will set up the precedent that is it okay to steal and loot the American people at will.  The people that are taking these types of programs are already vulnerable because of their financial situation.  We have to protect them from being exploited by these types of scams.

Consumer Reports – The Federal Trade Commission announced this week that it is taking legal action against more than a dozen marketers accused of offering bogus mortgage modification or foreclosure relief services. Foreclosure rescue companies that charge high upfront fees for help that never comes were among five financial traps we advised readers to steer clear of in a March 2009 Consumer Reports story describing scams that were flourishing in the wake of the economic meltdown.

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U.S. Mortgage Delinquencies reach a record high with 1 in 10 behind a payment

November 19, 2009 by · Leave a Comment
Filed under: Real Estate News 

This is not good news and the markets are not reacting to this news well.  The jobless claims remained unchanged at 505,000.  The New York Times pointed out that these delinquency numbers are being driven by changes in the employment numbers.  As long as we see these job numbers not improve or stay flat we are going to see more prime mortgages start to go into default.  Without income, you can not service debt and if you can’t service debt then you can’t keep current, let alone pay it off.

The “jobless recovery” is an inside joke and I am thinking that we are getting setup for a serious correction in markets that are being fueled by cheap money and artificially low interest rates that is forcing speculation.  Once we figure out what is happening and the recovery is more like a “head-fake” then better.  We need to cut spending, default bad debts, raise taxes and re-industrialize the country so we can start becoming the powerhouse we used to be.

New York Times – Nearly one in 10 homeowners with mortgages were at least one payment behind in the third quarter, the Mortgage Bankers Association said Thursday.  That is the highest figure since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008.

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Fannie Mae & Freddie Mac expand eligibility on home loan refinancing options

July 2, 2009 by · Leave a Comment
Filed under: Real Estate News 

Honestly I see what is trying to be accomplished with this expansion of the acceptable loan-to-value amount to 125% of the home’s value.  The goal of the program is to allow more people to refinance their home loan to a lower interest rate that will hopefully make it less likely the homeowner will default on the mortgage.

Instead, it is more likely going to set a “floor” in more home prices.  This is actually preventing the market from reflecting the actual value of all these homes that are being refinanced through this government sponsored loan program.  Yes, foreclosures are hard on the people being affected, there is no doubt in this.  But on the other side you have to think about the people who are striving to own their own home.  This in effect is artificially keeping prices higher than they would normally be without this intervention.  That is counter-productive in the way it punishes people who did not get an regular mortgage over these more exotic loans that had a huge rate hike baked in the formula.  Personally I would like to see less intervention and more market forces determining the outcomes of all these private contracts and agreements.

News (Reuters):

Mortgage finance companies Fannie Mae and Freddie Mac will expand efforts to prevent foreclosures by allowing refinancings by borrowers whose outstanding loans exceed the value of their homes by up to 25 percent, the Obama administration said on Wednesday.

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U.S. home mortgage applications fall almost 19% in June 2009

July 1, 2009 by · Leave a Comment
Filed under: Real Estate News 

With interest rates creeping back up to previous levels, it is no surprise that refinance activity has slowed considerably as of late.  In the article they state the the “5%” level is where the rates need to be for the market to maintain the activity that began when the government started aggressively pushing interest rates down to try and decrease the amount of defaults and foreclosure that have been associated with these sub-prime and Alt-A loans resetting to higher rates that are tied to the LIBOR or 10-year treasury bond.

News (Reuters):

U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday.

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