Here Come the Feds, Here Come the Feds

The Feds have ridden up on their white horses once again, this time to institute changes to RESPA, the Real Estate Settlement Procedure Act, a federal law designed to help borrowers shop for the best loan. RESPA is enforced by HUD, Housing and Urban Development. RESPA requires federal loan or mortgage programs backed by the Feds, like FHA for example, to provide borrowers with how much their closing costs and other fees are going to be. Many people know this document as the Good Faith Estimate. Recent changes in RESPA regulations which became effective January 1, 2010, require a standard format for the Good Faith Estimate which clearly discloses key loan terms and closing costs. The estimate must remain valid and binding for a certain number of days, allowing borrowers to shop around for better terms and lower fees. Time periods under the new RESPA rules must be honored. The good news is that borrowers should be better informed and in a better position to speak with other lenders and negotiate a better loan. The bad news is that the lender now has more hoops to jump through that will require borrowers to jump through some hoops of their own.

Credit, Credit, Who's Got Credit?

Some people are re-examining their use of credit, especially as the all-important Holiday shopping season is upon us. The cost of credit has skyrocketed of late as credit card companies ratchet up charges before the new federal law goes into effect in February 2010 that curtails companies' ability to raise rates at will. So here's some food for thought. Credit scores are calculated from a lot of different credit data in a credit report. This data can be grouped into five categories. Payment History is 34%; Length of Credit History is 15%; New Credit is 10%; Types of Credit Used is 10%; and Amounts Owed is 30%. A credit score takes into consideration ALL these categories of information, not just one or two. The importance of any factor depends on the overall information in your credit report. Your score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit that you are requesting. Your score considers both positive and negative information in your credit report. Late payments will lower your score but establishing or re-establishing a good track record of making payments will raise your score. If you want to improve your credit so that you can qualify for the best home loan rate, contact me and I'll put you in touch with a great mortgage consultant who can help you put a plan together so that within a year, you're likely to be able to qualify for a good loan, barring things like bankruptcy and law suits on your record. Keeping good credit is a piece of cake once you've cleaned your old credit report up.

Weekly Mortgage Report

MORTGAGE RATES REMAIN LOW, INCREASING AFFORDABILITY
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.6 point for the week ending September 24, 2009, unchanged from last week when it averaged 5.04 percent. Last year at this time, the 30-year FRM averaged 6.09 percent.
The 15-year FRM this week averaged 4.46 percent with an average 0.6 point, down from last week when it averaged 4.47 percent. A year ago at this time, the 15-year FRM averaged 5.77 percent. This is the lowest the 15-year FRM has been since Freddie Mac started tracking it in 1991.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, with an average 0.5 point, unchanged from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 6.02 percent.
The one-year Treasury-indexed ARM averaged 4.52 percent this week with an average 0.6 point, down from last week when it averaged 4.58 percent. At this time last year, the 1-year ARM averaged 5.03 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
“Mortgage rates held relatively steady at three-month lows this week,” said Frank Nothaft, Freddie Mac vice president and chief economist. Correspondingly, the Mortgage Bankers Association reported that mortgage applications jumped 12.8 percent over the week of September 18th to the strongest pace since late May, boosted by refinancing activity.
“In its September 23rd policy statement, the Federal Reserve (Fed) indicated that it plans to keep its benchmark interest rate exceptionally low for an extended period. This will likely benefit consumers who opt for ARMs, because they are typically tied to shorter-term interest rates. The Fed also noted that activity in the economy and housing market has picked up and financial markets have improved.”
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

It's a Great Time to Buy: Mortgage Rates Remain at Historic Lows

MORTGAGE RATES FLAT THIS WEEK THANKS MAINLY TO ACTIONS BY TREASURY AND THE FED

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.82 percent with an average 0.7 point for the week ending May 21, 2009, down from last week when it averaged 4.86 percent. Last year at this time, the 30-year FRM averaged 5.98 percent.
The 15-year FRM this week averaged 4.50 percent with an average 0.7 point, down from last week when it averaged 4.52 percent. A year ago at this time, the 15-year FRM averaged 5.55 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.79 percent this week, with an average 0.6 point, down from last week when it averaged 4.82 percent. A year ago, the 5-year ARM averaged 5.61 percent.

One-year Treasury-indexed ARMs averaged 4.82 percent this week with an average 0.6 point, up from last week when it averaged 4.71 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Long-term fixed-rate mortgage rates have remained below 5.0 percent for the past 10 weeks as the U.S. Treasury and Federal Reserve (Fed) act to keep interest rates low through security purchases," said Frank Nothaft, Freddie Mac vice president and chief economist. "The Treasury purchased $136 billion in mortgage-backed securities through April and the Fed bought $740 billion through mid-May. In addition, the Fed purchased $115 billion in Treasury bonds since March of this year.

"Housing construction continued to decline, as total starts fell to the lowest level since the Census Bureau began its monthly series in January 1959. While single-family construction appears to be near or at a bottom, multi-unit construction continued to recede. Reflecting the apparent stabilization in single-family construction levels, homebuilder confidence rose in May to the highest level since September 2008 and represented the first back-to-back up tick since February 2008."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

DEFINITIONS
Commitment Rate is the interest rate a lender would charge to lend mortgage money to a qualified borrower exclusive of the fees and points required by the lender. This commitment rate applies only to conventional financing on conforming mortgages with loan-to-value rates of 80 percent or less.

ARM Index - is the One-year Treasury
Loan to Value Ratio (LTV) is the ratio of the loan amount of a mortgage loan to the lower of the appraisal value or purchase price of the property securing the loan.
Origination Fees and Discount Points are the total charged by the lender at settlement. One point equals one percent of the loan amount.
Margin is a fixed amount added to the underlying index to establish the fully indexed rate for an ARM.

Weighted Averages for the Primary Mortgage Market Survey have been adjusted as of October 16, 2008. The new weights use the dollar volume of conventional mortgage originations within the 1-unit Freddie Mac loan limit as reported under Home Mortgage Disclosure Act (HMDA) for 2007.