Home Loan Focus

Archive for July, 2009

Gov’t Expands Homeowner Rescue Plan, While Rates and Mortgage Apps Dip

According to the Wall Street Journal, the Obama administration is redefining who can qualify for government assisted refinance programs. Apparently the original guidelines were not broad enough to help those most struggling with their loans.

After all, the first rules limited homeowners to having a 105 percent loan to value ration on their homes, yet according to Moody’s Economy.com, almost 30 percent of homeowners are underwater in their mortgages and many by much more than 5 percent. The new limit has been raised to 125 percent.

The revised rules come after only 20,000 borrowers received help under the program from March to June. The administration claimed it would be able to save up to 5 million homes from foreclosure at the outset of the initiative, a figure that was never likely to be achieved with the initial restrictions.

Meanwhile, interest rates are dropping and so are applications for mortgage loans. Freddie Mac announced Thursday that the average rate on a 30-year fixed rate loan fell to 5.32 percent, excluding fees, from 5.42 percent the previous week. Freddie had no explanation for the drop in rates this week, but they were likely due to falling yields on Treasury notes as investors worry that excessive government debt may result in inflation.

And mortgage application volume plummeted 18.9 percent in the latest week, according to the Mortgage Bankers Association on Wednesday. Home purchase applications fell by 4.5 percent, but refinance requests plunged down by 30 percent, as mortgage interest rates have risen in recent weeks, much higher than their record lows from the spring.

Not a particularly good week in the mortgage markets, but good things could be just around the corner, right?

Source: Gov’t Expands Homeowner Rescue Plan, While Rates and Mortgage Apps Dip

Home Prices Fell Just a Little in April, But No Real Sign of Economic Recovery

The median price of home sales in 20 of the nation’s major cities fell by an average of 0.6 percent in April, according to Standard & Poor’s Case-Shiller index, showing great improvement over March when they slid by 2.2 percent. Yet plenty of people are not so sure this is a sign of economic recovery on the whole.

As Steve Blitz writes on his economic markets blog:

“Recession definitely impacts home prices… But in each cycle, home prices recover before the economy does… Because the perception of recovery lags reality, this means that home prices begin to recover long before consumers believe the recession has ended and certainly before the unemployment rate starts to turn down… My forecast is for home prices to begin [to] move higher in the third quarter and to finish 2009 with prices about 11% below year-end 2008 levels.”

And home prices did start to rise in several of the tracked metro areas. Dallas, Denver, and Cleveland all experienced price gains of 1 percent or more from March.

But even S&P chairman David Blitzer is cautious about announcing this as a good sign.

“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here,” he said.

Blitzer attributed the slowing of price declines to a rise in consumer confidence and rallies in the stock market.  So what’s it all mean? Now may be the best time to get off the fence and buy a home before prices continue to rise. Then again, these number can easily fluctuate based on unemployment and other factors, so maybe you can wait until you actually start seeing price gains in a majority of the metro areas.

Source: Home Prices Fell Just a Little in April, But No Real Sign of Economic Recovery

Fame & Fortune: Danny DeVito

The actor is proud of his Jersey roots and the indie films he’s produced, such as “Pulp Fiction.”

Source: Fame & Fortune: Danny DeVito

Credit card rewards help foil recession

Choosing the right credit card rewards program can help a smart borrower get through the recession.

Source: Credit card rewards help foil recession

4 alternatives to payday lending

Payday loans often create more problems than they solve. Here are four alternatives for quick cash.

Source: 4 alternatives to payday lending

Ford quietly challenging GM

It retooled before the recession and spurned bailout money. Now it’s creeping up on its U.S. rival.

Source: Ford quietly challenging GM