Smart Borrower Blog

Archive for the ‘Mortgage Rates’ Category

New MDIA Law Spells Danger for Home Buyers

If you read an article in your local newspaper that said the new Mortgage Disclosure Improvement Act (MDIA) helps protect home buyers, you’ve been misled. This new law that went into affect July 30, 2009 is a wolf in sheep’s clothing. I’ll explain. What Sounds Good: Lenders must provide you with the Truth in Lending (TIL) form at least seven business days before closing. This form shows the Annual Percentage Rate for your loan. Receiving this information in advance sounds great. But wait. There is a big catch. The Potential Deception: The Annual Percentage Rate is not the interest rate... more »

Mortgage Interest Rates May Have Hit Bottom

Many market analysts are predicting that mortgage interest rates will not fall much lower than 5 percent   in the next few years, as plummeting rates have caused a flood of homeowners to start refinancing again. The average rate on a traditional 30-year fixed rate mortgage has fallen from around 6 percent in November 2008 to the current historic low of about 5 percent. January rates were the lowest on record in the past 30 years of the Freddie Mac mortgage rate survey. Economists are forecasting rates in the 5 percent to 5.25 percent range for the next quarter or... more »

Greenspan: Fed Actions Did Not Cause Recession

Although admitting that "we are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s," former Federal Reserve Chairman Alan Greenspan contended Tuesday that the interest rate actions of the Fed were not to blame for the current recession. In an opinion article on the Wall Street Journal’s web site, Greenspan argued that the true cause of the trouble was in the mortgage lending industry itself.   "The interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages," he wrote. "Between 2002 and 2005, home mortgage... more »

Obama Announces Details of New Housing Plan

President Barack Obama announced the details of his $75 billion plan Wednesday to help roughly 9 million struggling homeowners avoid foreclosure. “The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly, by refinancing loans for millions of families in traditional mortgages who are underwater or close to it,” he said in a speech at an Arizona high school. The funding for the Obama plan will come from the $275 billion stimulus package announced last month. It focuses on two major objectives. The first is to aid homeowners in refinancing into new, affordable mortgages,... more »

Top Dem Says Two-Thirds of Lenders Are On Board with Treasury Plan

According to Senate Democrat Charles Schumer Wednesday, two-thirds of the country’s mortgage servicers are willing to cooperate with the terms of the recently-released Treasury Department plans to prevent foreclosures nationwide. “Two-thirds of servicers are the large banks that are part of the [Troubled Asset Relief Program],” Schumer said. “They’ve already agreed they are going to refinance now that they are no longer worried about getting sued.” Schumer, a member of the Senate Banking Committee, reportedly got the two-thirds statistic from Housing and Urban Department (HUD) Secretary Shaun Donovan. The largest mortgage servicers in the country like Bank of America Corp.,... more »

Obama Commits $75 Billion to Fight Foreclosure Crisis

U.S. President Barack Obama unveiled his plan Wednesday to heal prop up the drooping national housing market, pledging $75 billion of government funds to fight high foreclosure rates. In a speech at high school just outside of Phoenix, Arizona, the President laid out a four-point plan for restoring the health of the mortgage sector. He said that his administration will: 1.Allow Fannie Mae and Freddie Mac to Modify Mortgages Currently, the government-sponsored mortgage companies, that own or guarantee a large portion of the nation’s home loans, are restricted from modifying "upside-down" mortgages and those that are more than 80 percent... more »

Geithner Reveals Obama Bailout Plan

The Obama administration laid out its new bailout plan Tuesday, projecting a total cost of $1.5 trillion to $2 trillion, including the second half of the original $700 billion bailout program funding. U.S. Treasury Secretary Timothy Geithner held a press conference, giving out details of the Financial Stability Plan and defending the high price tag. “As costly as this effort may be, we know that the cost of a complete collapse of our financial system would be incalculable for families, for businesses and for our nation,” he said. “We will make mistakes. We will go through periods in which things... more »

Low Rates Spur Major Refinancing, But Not Home Buying

The demand for mortgage money shot up in the latest week, led heavily by an increase in refinance requests, according to the Mortgage Bankers Association Wednesday. The MBA’ weekly Market Composite Index, a measure of the number mortgage applications filed, grew by 8.6 percent in the week ended January 30, 2009, to 795.4 on a seasonally adjusted basis from 732.1 the previous week. By far, the majority of the applications during the last week were for refinance loans rather than home purchase loans. The refinance share of all applications rose to 73.2 percent from 72.8   percent the week before.... more »

Fed Keeps Target Interest Rate in Zero Range

The Federal Open Market Committee   released its decision Wednesday to   leave its target interest rate unchanged in the range of zero to 0.25 percent. "The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time," the Fed said in its statement, citing examples of recent weakness in housing starts, industrial production, and employment conditions. Although the Fed is constantly trying to find the right balance between inflation and enough market liquidity, because of the dim forecasts for energy prices and other economic factors, the Committee "expects... more »

Foreclosure Activity Up 81 Percent in 2008

The number of foreclosure filings during 2008 shot up 81 percent over the previous year, according to foreclosure data company RealtyTrac Thursday. That growth accounts for at least one foreclosure filing notice for one out of every 54 American households. Filings include default notices, auction sales, and bank repossession notices. “Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,” James J. Saccacio, chief executive officer of RealtyTrac, said in the report. State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth-quarter numbers... more »