30-year mortgage edges up to 4.02%

Mortgage rates are looking stable amid an improving housing market, with Freddie Mac’s latest survey showing that lenders were offering 30-year fixed-rate home loans this week at an average interest rate of 4.02 percent, up from 4 percent a week ago.

The results of Freddie Mac’s weekly survey, released Thursday, said the average for a 15-year fixed mortgage slipped from 3.23 percent to 3.21 percent. The start rates for adjustable mortgages also fell slightly.

While higher than recent levels — Freddie’s survey showed the 30-year average at less than 3.6 percent at one point in January — the rates are still exceedingly low by historical standards and lower than a year ago, when the 30-year loan averaged 4.14 percent

Sean Becketti, Freddie Mac’s chief economist, noted that home sales have strengthened recently as buyers anticipate that the Federal Reserve will begin raising interest rates later this year.



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Posted: Friday, June 26, 2015 6:00 am

Mortgage rates are looking stable amid an improving housing market, with Freddie Mac’s latest survey showing that lenders were offering 30-year fixed-rate home loans this week at an average interest rate of 4.02 percent, up from 4 percent a week ago.

The results of Freddie Mac’s weekly survey, released Thursday, said the average for a 15-year fixed mortgage slipped from 3.23 percent to 3.21 percent. The start rates for adjustable mortgages also fell slightly.

While higher than recent levels — Freddie’s survey showed the 30-year average at less than 3.6 percent at one point in January — the rates are still exceedingly low by historical standards and lower than a year ago, when the 30-year loan averaged 4.14 percent

Sean Becketti, Freddie Mac’s chief economist, noted that home sales have strengthened recently as buyers anticipate that the Federal Reserve will begin raising interest rates later this year.
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“Buyers appear anxious to purchase homes,” Becketti said. “Given the tight inventory of homes for sale, a 5.1-month supply at the current sales pace, home prices are being bid up.”

Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering to solid borrowers seeking mortgages of up to $417,000.

The loans must conform to guidelines set by Freddie Mac and Fannie Mae, the nation’s other major buyer and guarantor of home loans.

The borrowers would have paid an average of 0.7 percent of the loan balance in upfront lender fees and discount points.

read more: http://www.southbendtribune.com/news/business/year-mortgage-edges-up-to/article_0d018d56-cf58-5e66-beab-3464ad29d02e.html

Here's what happens to their reverse mortgage after your parents die

As more seniors turn to reverse mortgages, their adult children might well be puzzled or concerned about what will happen to that debt when one or both of their parents eventually dies. At that time, questions about how to pay off the loan will need to be resolved -- and relatively quickly.
Loans are due when borrower dies

Nearly all reverse mortgages today are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to certain rules that might not apply to non-HECMs.

The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies.

The word "technically" is important because it's understood that a borrower's heirs can't possibly refinance or sell the home on the day of death to satisfy the debt, explains Beth Paterson, a certified reverse mortgage professional at Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minnesota.
A harsh letter

Instead, what usually happens in practice is that the loan servicer sends out a letter that Paterson says might seem insensitive but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.

"The servicing companies have had issues with people not notifying them and trying to stay in the home, so that's why it needs to be harsh," Paterson says. "My conversation to the consumer is that communication is vital."
Notice of demise

Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers.

"If they don't get the letter of occupancy back or property taxes or insurance aren't paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house," Paterson says.
Refi, sell or deed

The borrower's heirs aren't required to sell the home to pay off the reverse mortgage, says Cara Pierce, a housing and reverse mortgage counselor at ClearPoint Credit Counseling Solutions in Fresno, California.

But if heirs want to keep the home, they'll have to pay off the loan.

"If they want to get a loan in their own name and pay off the reverse mortgage, they can," Pierce says. "But if they can't and there are no other assets, like life insurance, other property or a 401(k), that they could use to pay off the loan, they will have to sell the property."

When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid.

The borrower's personal belongings and furnishings can be removed. Fixtures, as defined by state law, can't.

A tenant living in the property might have certain rights and protections under state law.

Read more: http://www.bankrate.com/finance/mortgages/pay-reverse-mortgage-after-parent-dies.aspx

How Mortgage Rates Move When The Federal Reserve Meets

Mortgage Rates Expected To Change

The Federal Reserve's Federal Open Market Committee (FOMC) adjourns from a scheduled two-day meeting Wednesday afternoon. The meeting's outcome is expected influence U.S. mortgage bonds which, in turn, will cause mortgage interest rates to change.

If you're currently unlocked on your loan; or about to start a refinance, consider yourself on alerted. Beginning Wednesday afternoon, mortgage rates may look decidedly different.

Since crossing 4 percent for the first time in nine months last week, mortgage rates have since dropped back to the threes. Rates for VA loans, FHA loans, and USDA loans are even lower.

It's an excellent time to consider locking a rate. Rates could change dramatically later this week and it would unfortunately to miss the last chance at sub-4 percent rates.

Click to see today's rates.
The Fed Does Not Control Mortgage Rates

Mortgage rates are made on Wall Street. Rates are not set by the Fed.

The Federal Open Market Committee is a rotating, 12-person sub-committee within the Federal Reserve. The group is currently headed by Federal Reserve Chairperson Janet Yellen, and meets eight times annually on a pre-determined schedule.

The Fed also meets on an emergency basis, as needed.

For example, during the three-year period 2008-2011, as the U.S. economy staved off depression, the Federal Open Market Committee met 13 times separate from its regularly scheduled meetings in order to review the group's ongoing stimulus plans.

In the time since, the Fed has met just twice in "emergency" -- once to discuss what would happen if the U.S. government failed to raise its debt limit (2013) and once to discuss how the group would communicate forward-guidance to the markets (2014).

The FOMC's most well-known role is as keeper of the Fed Funds Rate. The Fed Funds Rate is the prescribed rate at which banks lend money to each other on an overnight basis.

When the Fed Funds Rate is low, the Fed is attempting to promote economic growth. This is because the Fed Funds Rate is correlated to Prime Rate, and Prime Rate is the basis of most bank lending including most business loans and consumer credit cards.

Since December 2008, the Federal Reserve has held the Fed Funds Rate in a target range near 0.00% which has made borrowing money "cheap" for both businesses and consumers.

The Federal Reserve has advised Wall Street that the Fed Funds Rate will remain near zero percent until the labor market is markedly improved, assuming stable inflation. Once the economy improves, a rise in the Fed Funds Rate becomes possible.

An increase to the Fed Funds Rate may not move mortgage interest rates higher, though.

see more at: http://themortgagereports.com/17724/how-mortgage-rates-move-when-the-federal-reserve-meets

Improving home prices chip away at underwater mortgages

Less than 20 percent of homeowners with a mortgage in the Chicago area owed more on their mortgage than their homes were worth in the year's first quarter, as slowly rising home prices continue to benefit homeowners.


During 2015's first three months, 19.1 percent of area residential properties with a mortgage, or almost 262,000 properties, were underwater, real estate data firm CoreLogic reported Tuesday. That compares with 21.9 percent of properties a year ago.


Despite the improvement, the percentage of mortgaged, underwater residential properties in Chicago's housing market was second only to Tampa-St. Petersburg-Clearwater, Fla., where 23.1 percent of properties were underwater. Also on the list of the top five markets in the worst shape were Phoenix-Mesa-Scottsdale, Ariz., at 16.9 percent; Riverside-San Bernardino-Ontario, Calif., at 13.9 percent; and Warren-Troy-Farmington Hills, Mich., at 13.4 percent.


Nationally, 10.2 percent of properties were underwater at the end of March, and rising home prices meant borrower equity rose by $694 billion year-over-year during the quarter. During the first quarter, home prices rose 2.5 percent, according to the firm.

read more: http://www.chicagotribune.com/business/breaking/ct-underwater-homeowners-0617-biz-20150616-story.html

Reverse Mortgages Could Mean Elderly Lose Homes

A recent government study has found adverts for reverse mortgages which largely target seniors can be misleading. Elderly people tempted by these offers could find they end up losing their home rather than gaining financial freedom.

The Consumer Financial Protection Bureau carried out a study showing elderly homeowners are being misled by the advertising for reverse mortgages and this could result in large financial problems. According to the article in CNNMoney.com, many homeowners don’t realize that reverse mortgages are essentially loans which means they eventually have to be paid back. In addition homeowners are confused by the inaccurate and often incomplete information they receive from lenders. This is partly due to the fact that they didn’t read the fine print on the ads which are frequently shown on the Internet and on TV.

A reverse mortgage is a loan that enables homeowners aged 62 or older to release equity in their homes through taking out a loan. Payment and interest on the loan is deferred until they move home, sell up or die.

The study looked at 97 ads from a number of different lenders that were shown in five large urban markets during a one-year period from March 2013. They also conducted interviews with 59 homeowners aged 62 or older to get their overall impression of the ads. The results were interesting as apparently some homeowners thought a reverse mortgage meant they could never lose their home while others thought the money they received through a reverse mortgage was due to home equity built up over the years and therefore there was no reason why they would ever have to pay it back. This shows the information being given out is misleading, because as the study points out homeowners are still liable for insurance and maintenance on the property as well as property taxes. If they fail to pay these then they can end up in foreclosure. This information is typically shown in the fine print which not everyone bothers to, or is able to read.
- See more at: http://realtybiznews.com/reverse-mortgages-could-mean-elderly-lose-homes/98728503/

80 percent of banks say credit has tightened, mortgages more difficult to get

CLEVELAND, Ohio -- Nearly 18 months after it became more difficult to qualify for a mortgage, nearly 80 percent of banks say that lending has tightened, and about 19 percent say the impact is "severe."

The American Bankers Association, which conducted a survey about mortgages approved last year, also said the new mortgage rules have hurt the housing market recovery. "Combine that with new mortgage disclosures, which are just around the corner, and we'll continue to see a slow down in what should be the ideal time to buy a home," said Robert Davis, ABA executive vice president.

Cleveland-area banks say the biggest impact on consumers is that borrowers must submit more documentation. Lenders overall said mortgages under the new law cost more, and require bigger down payments and better credit scores.

The Consumer Financial Protection Bureau adopted the rules for "qualified mortgages" in January 2014. The new rules don't absolutely prohibit home loans that aren't "qualified," but say the lender could face penalties and liability if it makes a non-qualified loan and the borrower defaults. Further, the same penalties will affect any company that buys or touches the loan. So a lender is unlikely to originate a non-qualified loan unless it plans to hold on to the loan and not sell it.

About 90 percent of the typical bank's mortgage loans made last year were "qualified mortgages," the ABA said.

The most common reasons for being rejected for a mortgage, according to the ABA, are borrowers with high debts compared to income and the lack of having required documentation.

The ABA also said that, despite ridiculously low 10- and 15-year interest rates, more people took out 30-year loans in 2014 compared with 2013. Half of all loans last year were 30-year loans.

One-third of banks said the impact on business has been "extremely negative." About 54 percent said the effect on business has been moderate.

read more: http://www.cleveland.com/business/index.ssf/2015/06/80_percent_of_banks_say_credit.html

Reverse mortgages making comeback to help seniors

SCOTTSDALE, AZ (KPHO/KTVK) -

Saving money for retirement isn't easy, but some Valley seniors have found a way to make money off the equity of their own home.

Tim Ryan is a reverse mortgage specialist with iReverse Home Loans.

Ryan said that reverse mortgages are making a comeback, with a growing number of seniors looking to create more cash flow.

"We have a lot of people doing it to plan their retirement, take charge of their finances, and live the life style they want to live," Ryan said. "About half of my clients are seniors that do reverse mortgages to just have a better life."

Paul and Caroline Walrad, of Scottsdale, said that their reverse mortgage has provided them more financial flexibility as they get closer to retirement.

"It's a huge sense of relief," Caroline Walrad said. "To feel that you are in one place and can be in one place for the rest of your life is extremely comforting."

"Basically, what it's done is replenish the money we lost in the (housing) crash," said Paul Walrad. "It paid also for medical expenses I had."

The reverse mortgage is still a loan, but instead of making a monthly payment, homeowners can receive a lump sum.. monthly payment or line of credit, based on the amount of equity they have in their house.

To be eligible you must be at least 62 years old, and you must pay off your remaining mortgage before receiving any money.

However, certified public accountant Seth Fink said that reverse mortgages are not for everyone.

According to Fink, there are some drawbacks which include:

    Closing costs that can be more expensive than a traditional loan.
    Little money left for surviving children.
    Heirs will inherit the home with a lien on it.
     f you run out of money, you may need to sell the property.


Read more: http://www.kpho.com/story/29234295/reverse-mortgages-making-comeback-to-help-seniors

Consumers Can’t Void Second Mortgage In Bankruptcy, SCOTUS Rules

Consumers taking out a second mortgage will now have to consider the fact that if they encounter financial difficulties and file for bankruptcy, they won’t be able to strip off the additional loan obligation.

The Wall Street Journal reports that the Supreme Court ruled in favor of banks when it came to determining that struggling homeowners can’t get rid of a second mortgage using bankruptcy protection, even if the home’s value is less than the amount owed on the first mortgage.

Monday’s unanimous ruling involved two cases in which Florida homeowners sought to cancel their second mortgages – issued by Bank of America – under the argument that when both primary and subsequent loans are underwater, the second is worthless.

The homeowners in the cases were previously allowed by lower courts to nullify the second mortgages. Back in 2013, those rulings were affirmed by the Atlanta-based 11th U.S. Circuit Court, the Associated Press reports.

However, Bank of America maintained that the rulings conflicted with Supreme Court precedent, arguing that even if the primary mortgage is underwater, it shouldn’t affect the lien securing the second loan.

According to the bank, there remains a possibility that the second loan would be repaid if the property’s value rose in the future.

The company also claimed that after the Circuit Court ruling, hundreds – if not thousands – of struggling homeowners had moved to nullify their second loans, the AP reports.

Justice Clarence Thomas said on Monday that the SCOTUS decision took into consideration the shifting nature of property, the WSJ reports.

see more of this: http://consumerist.com/2015/06/01/consumers-cant-void-second-mortgage-in-bankruptcy-scotus-rules/