“Mortgage Bonds have Fallen below the 25-Day Moving Average, a key technical support level making the short term for rates more uncertain. In order for the drop below support to be confirmed, the Bond must close below the 25-Day moving average for two consecutive days. News of greece over this weekend can be a market mover. Hence, Tuesday is an important day to watch.
Hopefuly, you took my advise on Thursday when I sent out an Alert to Lock. Bonds moved lower due to the markets beleiving that a deal in Greece is close. Concerns over inflation also weighed on Bond Prices as the Core Consumer Price Index (CPI) rose to its highest levels since Oct. 2008. The 50-Day Moving Average and the Rising Trendline are both just below present levels and will hopefuly provide support for Bonds. Remember, Mortgage Rates move opposite the Bonds price. All Capital Markets are closed Monday in Observance of Presidents Day.
The 30 Year Fixed Rate moved higher by about .125% to 4.00% - No Points, but the 15 Year Fixed Rate remained unchanged at 3.375% No points.
For now, I recommend cautiously Floating Rates, Not Locking, as we watch Bond Prics and for new levels of support to emerge.
Underwater Homeowners Get Another Shot at it with Harp 2.0
HARP was introduced in 2009, and it was designed to help homeowners with mortgages owned by Fannie Mae or Freddie Mac. The program allowed borrowers to refinance at up to 125 percent of their homes’ current values. For example, under HARP, if you owed $125,000 on a house that was now worth $100,000, you could qualify for a HARP refi, because your loan was 125 percent of the home’s value. But if you owed more than 125 percent of the home’s value, you were out of luck.
The biggest change under HARP 2 is the elimination of the loan-to-value limit.
- The program is for borrowers whose mortgages are owned by Fannie Mae or Freddie Mac, and who got their loans before May 2009.
- Property Appraisal is not required.
- Verification of income is not required, but must verify employment.
- There is no loan-to-value cap. You can borrow more than 125% of the homes value.
- Borrowers can qualify for HARP 2 refis if they have paid on time for the last six months and have no more than one 30-day late payment in the last 12 months. Originally, HARP didn’t allow any delinquencies in the last 12 months.
You can find out if you qualify for a Harp 2.0 loan by calling 877-794 5363.
Senator Proposes Bill for New Modification Plan
New Jersey Senator Robert Menendez is proposing a plan that would help under water home owners. Here’s how it would work:
Banks would modify deals on those homes under water. The borrower can be behind on their payment but must show the ability to make the modified payment and needs to make the payment going forward.
The loan would be written down to 95% of the appraised value over 3 years (1/3 per year).
The bank would then share in up to 50 percent appreciation going forward depending on the percentage of aid slashing they did on the loan. For example; a home with a balance of $125,000 is now only worth $100,000. So, $30,000 would be slashed from the balance over a three year period. Six years from now the house is worth $150,000. That’s a profit of $55,000, of which the bank would get $13,200 or 24 percent for participating in the program. Also, the banks proceeds would be less any improvements done (after the start of the modification) to the house.
Will this work? According to a pilot program like this performed by a private bank, the results were a re-default rate of only 2.6 percent. That’s not bad, and the mortgage Backed Securities Market might not be as compromised as it is with general write downs or future waves of foreclosures, as the banks get to share in the equity appreciation.
This plan does not appear to be a drain on tax payers and is friendly to both the underwater buyers and the banks. There are 10 million homes under water. That’s 22 percent of all homes in the country. If nothing is done to resolve the problem, those under water home owners will walk. Some already have. This is a positive plan and should be considered by our government. source Think Big Work Small
Real Estate Investors are Back -During the first 9 months of last year investors represented 26 percent of all single family homes and condos sold in 167 markets.
15 & 20 Year Mortgages Gain Popularity – During the 4th quarter of 2011, 43 percent of all refinances went into 15 & 20 year loans. That’s almost half of all refinances.
The National Average for a 30 Year Fixed Rate Mortgage reported for last week was unchanged at 3.87% with a cost of just under 1 point (0.8 point) to get that rate according to a Freddie Mac Report.
Congress Passes Payroll Tax Cut Extension
A payroll tax cut and jobless benefits measure passed both the House and Senate Friday after lawmakers reached a compromise earlier this week.
The House voted 293-132 and the Senate 60-36 to approve the extension through the end of this year.
President Barack Obama earlier expressed his intent to sign the bill upon passage by Congress. A two-month extension of the benefits enacted in December would expire Feb. 29.
Economic News
National Association of Home Builders/Wells Fargo index, shows homebuilder confidence at a four-year high. The index report shows homebuilder confidence rising from an index score of 25 to 29, a solid increase that is still below the preferred 50-plus level. A score of 50 or above generally signifies a confident homebuilding market.
Housing Starts rise by 1.5% in January.
The Congressional Budget office (CBO) says after three years of the Unemployment Rate being over 8%, its the longest period of high unemployment since the Great Depression.
Weekly Jobless Claims fall by 13K to 348K.
Foreclosure filings edged up by 3% in January.
Core Producer Price Index (PPI) doubles expectations to 0.4%.
NY Fed’s Empire State Survey Improves More Than Expected, at 19.53 in Feb.Vs. 13.48 in Jan.
Consumer Spending rose in January by 0.4% as evidenced by the Retail Sales report…but was below the 0.8% rise that was expected.
Consumer Price Index Rises 0.2% in January, Core Also Up 0.2%.
