The Wall Street Journal
A report by the Inspector General for the Federal Housing Finance Agency says that the FHFA hasn’t done enough to oversee mortgage-servicing companies used by Fannie Mae and Freddie Mac to collect payments on home loans despite widespread attention to problems in the industry.
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http://blogs.wsj.com/developments/2012/03/07/report-criticizes-housing-regulator-on-mortgage-servicing/
Financial institutions filed nearly 20,000 mortgage loan fraud suspicious activity reports in the third quarter, according to a report by the Financial Crimes Enforcement Network. That was an increase from the approximately 16,500 reports filed in the same quarter of 2010.
Some of the types of suspicious activity reported included: some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.
Almost 62 percent of the filings reported involved suspicious activities that started four or more years ago. These filings stem largely from mortgage repurchase demands and special filings generated by several depository institutions related to mortgages originated in the height of the housing boom.
The top five counties ranked per capita were Santa Clara County, California; Honolulu County, Hawaii; Orange County, California; San Bernardino County, California; and Palm Beach County, Florida.
The New York Times
With interest rates at historically low levels, many borrowers are finding value with a reliable fixed-rate mortgage. However, borrowers who think they could be relocating in the near future, or need to shore up savings, might want to consider what some regard as the next best thing: An adjustable-rate mortgage that offers several years at a fixed interest rate.
Making sense of the story
- Hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s. They fell out of favor – along with the riskier ARMs that offered extremely low teaser rates and interest-only components – after the subprime mortgage market collapsed.
- Some adjustable-rate mortgages have an interest rate that changed every year, but a hybrid – also known as a delayed first-adjustment ARM – has a fixed interest rate for a period of time. Most loan officers refer to a hybrid by the period during which the rate is fixed. A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 loan adjusts after seven years.
- ARMs account for only a small segment of the overall mortgage nowadays, financing just slightly more than 10 percent of home purchases. However, market share for hybrid loans is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac. The 5/1 hybrid was the most popular adjustable-rate loan product in the market, according to the survey. The least popular was a 3/3 ARM, which adjusts once every three years.
- A common reason for choosing a hybrid ARM is projected length of homeownership. It’s a nice option for buyers who don’t expect to stay in their home for longer than three to five years.
- Rates on hybrid ARMs are also attractive. As of last week, the average rate on a 5/1 loan was 2.81 percent, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.
- Borrowers should be aware though that with rates starting at rock-bottom levels, there’s generally only one direction for them to go. And even though there are caps on the rate change amount, the jump could be as much as six percentage points.
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http://www.nytimes.com/2012/02/19/realestate/mortgages-a-fixed-rate-alternative.html
The Los Angeles Times
On Monday, lawmakers pressed the regulator of Fannie Mae and Freddie Mac to write-down the principal on mortgages of underwater homes.
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http://www.latimes.com/business/money/la-fi-mo-principal-writedowns-20120206,0,6192746.story?track=rss
The Wall Street Journal
Just as in 2011, in 2012 many will be trying to figure out where housing is headed. While the housing market didn’t worsen in 2011, it also didn’t stabilize either. This year, the story will be about local markets. While many housing markets rose and fell together, they’re recovering at difference paces so talking about housing on a national level is not beneficial.
Making sense of the story
- Confidence and jobs: Housing is more affordable than it has been in decades, but many would-be buyers are worried about buying today if prices are going to be lower tomorrow. Still, others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.
- Foreclosures: Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital. Because banks are faster to cut prices to unload inventory than are traditional sellers, home values can fall further as the share of distressed sales rises.
- Rents: If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge
- Mortgage credit and rates: It’s still hard for many buyers to get approved for a mortgage because banks are demanding lots of documentation of borrowers’ incomes.
- Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012.
- Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments. This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.
Read the full story
http://blogs.wsj.com/developments/2012/01/05/five-issues-for-housing-in-2012/
