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Monthly Archives: August 2012

Mortgage Refinance Applications Saw a Spike In Some States Through July

In some of the states hardest hit by the housing crisis, the number of homeowners who took advantage of mortgage refinance grew exponentially throughout the month of July, according to a monthly survey done by the Mortgage Bankers Association (MBA).

The MBA, which monitors 75 percent of all mortgage activity nationwide, conducts their survey monthly to keep track of trends in the housing market. The report for July showed that the percentage of refinance applications being filed in some states more than doubled the figures from the same period last year.

High Rents and Cheap Home Prices Prompting First Timers to Buy

New figures released by the National Association of Realtors (NAR) have shown that July home sales are up 10 percent compared to the numbers from a year ago. The report shows that, due to a friendly buyers market, first time homeowners are leading the charge.

Much of this can be traced to record low average interest rates on new mortgages combined with relatively low home prices. The NAR report shows that rates currently hover near 3.5 percent for a fixed rate mortgage, which is nearly an entire percentage point lower than last year.

Government Officials Go On Tour To Promote Expanded Refinance Programs

President Barack Obama is taking his plan to help underwater borrowers on the road this week in an appeal to voters and members of Congress.

The president enlisted Secretary of Housing and Urban Development (HUD) Shaun Donovan to meet with officials and homeowners across the country to raise the awareness of a bill that, if passed, could potentially help millions of underwater borrowers.

Mortgage Markets Back Up Because of Favorable Borrowing Conditions

Members of the armed forces seeking to take advantage of the federal governments VA loan program have flooded banks of late. This has made it hard for many lenders to keep up with the demand for the popular mortgage package, as lending conditions have become increasingly favorable for eligible borrowers.

Between 2008 and 2010, many healthy U.S. banks were forced to take on mortgages originally owned by one of the 250 institutions that were unable to survive the collapse of the housing market. Because of this, it became difficult for many lenders to handle the glut of applications in a timely manner.

Since 2011, The Number of Delinquent or Foreclosed Upon Loans Have Dropped

The second quarter of 2012 showed a modest but expected increase in the delinquency rate for mortgages on one-to-four bedroom residences nationwide compared to the previous quarter. The increase brought the percent of all borrowers currently delinquent on their loans to 7.58 percent, an uptick of 18 basis points from the beginning of the year.

However, this marks a decrease of 86 basis points from the same period in 2011, according to the National Delinquency Survey from the Mortgage Bankers Association (MBA). In the report, the MBA acknowledges that delinquency rates typically see a slight increase yearly in the second quarter, as borrowers have trouble tightening their budgets before the summer months.

Severely Underwater Borrowers Now Clamoring to Take Advantage of Mortgage Refinance

When President Barack Obama first announced a plan to help homeowners refinance their underwater mortgages back in 2009, the borrowers who suffered most following the collapse of the housing market were slow to embrace it. However, after revamping the President's Home Affordable Refinance Program (HARP 2.0) earlier this year, the program's popularity has finally caught on.

According to figures from Sallie Mae, the number of people seeking refinance with loan-to-value (LTV) on their mortgages above 125 percent have skyrocketed. In March, when the revamped program was widely enacted, this demographic accounted for only 3.7 percent of all applicants. By June, almost half of the borrowers who applied had these kinds of severely underwater mortgages.

California Group Proposes Plan to Help Underwater Homeowners

A San Francisco group has been petitioning municipal and state governments around the nation to consider using eminent domain to help underwater homeowners.

The group, Mortgage Resolution Partners (MRP), is comprised of wealthy Californians with experience in the financial sector, including former California State Treasurer Phil Angelides.

Why VA Loans Have Recently Surged In Popularity

The governments VA loan program turns 68 this year, having helped 18 million veterans secure mortgages since it was developed in 1944. This program has been especially helpful to members of the armed forces over the past five years following the collapse of the housing market.

Since 2007, VA loan volume has grown by 170 percent, reflecting the tough borrowing restrictions instituted by lenders when the market took a nosedive.

Cash-in Refinance Shrinking In Popularity Because of Government Initiatives

As a result of recent government initiatives, such as the Home Affordable Refinance Program (HARP 2.0) and recent changes to the VA loan program, the number of borrowers taking advantage of cash-in refinance has evaporated.

When refinancing a mortgage, borrowers can sometimes increase their favorability with a bank by paying off a portion of their loan. By doing so, they can usually secure a lower interest rate. This had historically been a popular and effective way for borrowers to lower their monthly mortgage payments.

Average Homeowner Holding On To Savings From Mortgage Refinance

Mortgage refinance has seen a major uptick in the first two quarters of 2012, prompting modest but notable recovery in both the housing market and the overall economy. Although the immediate effects of this upswing in the mortgage business may not be astounding, a recent report from Bloomberg News predicts that the benefits may be more significant in the long term.

Currently, borrowers who are taking advantage of mortgage refinance are benefiting from record low interest rates, allowing them to save significantly on their monthly payments if they have loans that were originally financed before the burst of the housing bubble.