Mortgage Refinance Archives

Homeowners’ Emergency Mortgage Assistance Program Back to Life

Homeowners’ Emergency Mortgage Assistance Program Back to Life

Because of money from a lawsuit settlement, a state mortgage assistance program is being revived.

The Homeowners’ Emergency Mortgage Assistance Program is again offering help to struggling homeowners. It offers loans to those were not able to make their monthly mortgage payments, nor bring their balance current, nor subsidize payments for up to three years.

In order for borrowers to qualify for these loans, they should be living in the property as their primary residence, is struggling from financial problems that were not their fault, and have an acceptable probability of being able to continue paying.

Roughly 45,000 households have received assistance from the program since its start three decades earlier. In the last few years, the HEMAP program received funds of approximately $11 million every year, allowing it to give loans ranging from 1,500 to 1800 loans annually.

In Allegheny County, the number of loans dropped during the last half decade, from 212 in the year 2007 to 109 in 2010, and 92 in 2011. However, new loans from the Pennsylvania Housing Finance Agency, which is in charge of running the program, were stopped following the budget cut in the previous year to $2 million.

Fortunately, a multistate settlement collected a total $25 billion from the five biggest mortgage loan services in the nation. This means that a total of $66.5 million will be given to Pennsylvania as funding for the program.

According to a measure that the state Legislature accepted in June, 90 percent of the funds, or roughly $60 million, must be spent on the HEMAP program over the next three to five years. The rest will used to fund housing-related consumer protection programs, with the help of the state attorney general’s office, and also for legal assistance in terms of housing.

Gov. Tom Corbett said that the funding for HEMAP will mostly help struggling homeowners, and at the same time, it is important in the recovery of the state’s housing industry.

New Home Lending Rules Proposed by CFPB

New Home Lending Rules Proposed by CFPB

The Consumer Financial Protection Bureau (CFPB) proposed a policy which states that mortgage servicing must provide clear monthly billing statement, must warn borrowers prior to interest rate hikes and assist them avoid foreclosure. Moreover, it requires companies to credit people’s payments without delay, correct errors immediately and keep better internal records.

According to Richard Cordray, director of CFPB, the main disappointment among companies in the industry reflects that all services must meet basic standards of good customer service. Cordray added that the proposal shows two basic, common-sense standards.

The key players in the nationwide crisis are the mortgage services since they are accountable for foreclosing on homes when people are no longer able to pay. They have encountered a lot of criticism for their practices such as charging of excessive fees, foreclosing without completion of the required paperwork, and not helping people stay in their homes through modifying their loan terms.

The proposal states that companies will be required to provide billing statements that give details about how much of a payment is going to pay down principal, how much goes to interest and how much goes to fees. Also, if interest rates are expected to change, they should provide the borrowers with an estimate of the new payment amount. Lastly, consumers will be allowed to consider refinancing if they dislike the new rates.

In addition, the proposed policy help ensure that borrowers are not coerced to pay excessive premiums on homeowners insurance that services oblige them to have. Moreover, companies would be required to inform the borrowers twice prior to charging them for insurance. If the borrowers can prove that they already had coverage, then companies would have to cancel the insurance.

Finally, companies would be required to associate a staff with delinquent borrowers so that they can be assisted in avoiding foreclosure.

The public can give a comment about the proposal until October 9 and the rules will be finalized by CFPB on January 2013.

Demand for Mortgage Loans Increases

Demand for Mortgage Loans Increases

According to a survey conducted by the Federal Reserve this summer, approximately three out of five U.S. banks said that the demand for mortgage loans is increasing as the housing market becomes stable and mortgage rates decline to record lows.

However, even though there is an increase in mortgage demand, lenders are still strict when it comes to mortgage borrowers and small business loans as well.

The report discovered a large increase in demand from borrowers. 57 percent of banks reported an increase in demand for home-purchase loans during the last three months, which is up from 38 percent during quarter one.

Peter Newland, economist at Barclays Capital, said that the increase in loan demand proves the housing sector is gradually recovering.

In addition, the report discovered that the credit standards of banks are still tough for mortgage borrowers or small businesses. In fact, 93 percent of the loan officers surveyed said that standards for approving mortgages to borrowers with good credit were the same with the previous quarter, and 95 percent said that standards were the same for firms with lower than $50 million annual sales.

Moreover, it was stated in the report that loan terms improved for medium and large companies, commercial real estate deals, auto loans and credit cards.

According to Millan Mulraine, analyst at TD Securities, the improving credit conditions is one of the signs that the economy is recovering.

The respondents of the Fed survey included 64 domestic lenders and 23 U.S. branches of foreign banks from July 3 to July 17.

Based on the survey, banks have been careful in terms of applying the Home Affordable Refinance Program, which is an effort by the Obama administration to encourage refinancing. However, the majority of banks have restricted their participation to loan they already hold. Most banks said that they were getting more refinancing applications than they could handle.

Mortgage Rates are Now Increasing

Mortgage Rates are Now Increasing

For a 30-year fixed mortgage, the average U.S. rate increased this week following the decreasing to its record lows in the last four weeks.

According to mortgage buyer Freddie Mac last Thursday, the rate on the 30-year loan increased to 3.55 percent from 3.49 in the previous week.

For a 15-year fixed mortgage, which a common refinancing option, the average rate increased to 2.83 percent from 2.80 percent in the previous week.

Less expensive mortgage rates has aided in a moderate but irregular housing recovery this 2012. Sales of new and occupied homes in the past declined in the month of June from May but it was higher than the same period in the previous year. Moreover, home prices have begun to increase in most of the cities.

Meanwhile, low mortgage rates can aid the economy if the number of people who refinance increase. This is because people pay less interest and this increases their money for spending. An increase in spending helps in the growth of the economy.

Unfortunately, the speed of home sales is still under healthy levels due to the fact that a lot of people are having problems in becoming eligible for home loans or do not have a large amount of money for down payments asked by banks.

Also, the slow job market could hinder some people from purchasing homes this year. Based on the data from Labor Department, the unemployment rate increased for the month of July to 8.3 percent, despite the increase in jobs offered by employers, from 151,000 to 163,000 jobs.

Last Wednesday, the Federal Reserve said that the economy is becoming weak and promised again to take actions if the job market continues to weaken. The Fed also recognized the fact that economic activity weakened during the first six months of the year, unemployment increased, and consumer spending declined.

Increase in Mortgage Applications

Increase in Mortgage Applications

Based on the information from Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, there was an increase in the mortgage application by 0.2 percent last week.

The Market Composite Index, which is a gauge of the number of mortgage loan applications, was up by 0.2 percent to its peak level since June 8 this year on a seasonally adjusted basis. Similarly, it was up by 0.2 percent from last week on an unadjusted basis.

The Refinance Index was up by 0.8 percent from last week to its peak level since April 17 of this year. However, the slight increase in refinancing was only subdued by a 6 percent decrease in government refinance applications, although conventional refinance activity was up nearly 2 percent.

The Purchase Index decrease almost 2 percent on a seasonally adjusted basis from the previous week. In the same way, the unadjusted Purchase Index decreased from the previous week.

There was an increase in the refinance share of mortgage activity to 81 percent of all the applications from one week earlier to its peak level since January 20 of this year. In contrast, there was a drop in the adjustable-rate mortgage share of activity to 4.1 percent of all the applications from one week earlier.

For a 30-year fixed rate mortgage with conforming balances, the average contract interest rate was up from 3.74 percent to 3.75 percent, along with points increasing from 0.43 to 0.51 for 80 percent loan-to-value (LTV) ratio.

For a 30-year fixed rate mortgage with jumbo loan balances, the average contract interest rate was up from 3.99 percent to 4.01 percent, along with points increasing from 0.28 to 0.32 for 80 percent LTV loans.

For a 30-year fixed rate mortgage backed by FHA, the average contract interest rate was still the same at 3.52 percent from one week earlier, along with points increasing from 0.52 to 0.55 for 80 percent LTV loans.

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