15-Year FRM and 5-Year ARM Remain Unchanged From Previous Week

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.17 percent with an average 0.5 point for the week ending December 27, 2007, up from last week when it averaged 6.14 percent as well. Last year at this time, the 30-year FRM averaged 6.18 percent.

The 15-year FRM this week averaged 5.79 percent with an average 0.5 point, unchanged from last week when it also averaged 5.79 percent. A year ago at this time, the 15-year FRM averaged 5.93 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.90 percent this week, with an average 0.5 point, also unchanged from last week when it averaged 5.90 percent. A year ago, the 5-year ARM averaged 5.98 percent.

One-year Treasury-indexed ARMs averaged 5.53 percent this week with an average 0.7 point, up from last week when it was 5.51 percent. At this time last year, the 1-year ARM averaged 5.47 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Stronger consumer spending and an increase in the core price deflator in November caused long-term bond yields to inch up over the end of last week and beginning of this week, with mortgage rates following," said Frank Nothaft, Freddie Mac vice president and chief economist. "Offsetting some of the increase, however, was a decline in November's index of leading economic indicators and a weak manufacturing report in Philadelphia for December.

"House prices continued to decline in October, falling nearly 16 percent (annualized), and represented the fifteenth consecutive monthly decline according to the Standard & Poor's/Case-Shiller 20-city composite index. Seventeen of the twenty metropolitan areas displayed negative growth from October 2006. Falling house prices and tightened credit standards will likely slow consumer spending somewhat over the near term."

 source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com
 

Housing Market Continues To Show Weakness.

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.14 percent with an average 0.4 point for the week ending December 20, 2007, up from last week when it averaged 6.11 percent as well. Last year at this time, the 30-year FRM averaged 6.13 percent.

The 15-year FRM this week averaged 5.79 percent with an average 0.4 point, up from last week when it averaged 5.78 percent. A year ago at this time, the 15-year FRM averaged 5.89 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.90 percent this week, with an average 0.5 point, up from last week when it averaged 5.89 percent. A year ago, the 5-year ARM averaged 5.96 percent.

One-year Treasury-indexed ARMs averaged 5.51 percent this week with an average 0.6 point, up from last week when it was 5.50 percent. At this time last year, the 1-year ARM averaged 5.44 percent.

"Stronger-than-expected inflation reports and retail sales for November put upward pressure on long-term interest rates late last week," said Frank Nothaft, Freddie Mac vice president and chief economist. "However, ensuing data releases suggested further weakness in the housing market over November and December and allowed interest rates to drift back down. The net effect left mortgage rates little changed this week.

"Both the producer and consumer price indexes jumped for the month of November, implying inflation may still be a threat to the economy while retail sales increased twice as much as market forecasts, reflecting healthy consumer spending. At roughly the same time, single-family housing starts fell 5.4 percent in November to 829,000, the slowest pace since April 1991, and homebuilder confidence in December held for the third consecutive month at the lowest level since records began in January 1985." 

Source: FreddieMac, Primary Mortgage Market Survey® (PMMS®), www.freddiemac.com 

The FHA, established in 1934, aims to help borrowers, particularly those in the low income bracket. This is by guaranteeing banks that those loans would be repaid should the borrower defaults.

The agency's loan limits have generally lagged behind those of Freddie Mac and Fannie Mae and as home prices climbed dramatically and lenders with lenient underwriting standards proliferated making the agency less and less of a player in the mortgage market.

This can be evidenced by the decrease in FHA’s share in new mortgages from 9.1 percent ten years ago to 1.8 percent this month. This was according to Inside Mortgage Finance. A major reason for the fall is the FHA loan cap which, in many parts of the country, can not cover the purchase price of even a low end house.

This observation over the years has made a call for the FHA reform. Last Friday, an important milestone was reached when the U.S. Senate overwhelmingly approved its version of the legislation.

The bill which seeks to make the Federal Housing Administration more relevant in the current housing and mortgage lending environment will expand the agency, loosen some underwriting standards, and raise its current restrictive loan limit.

The Senate version of FHA reform would raise the limit on FHA loans from $362,000 to at least $417,000 which is the current limit on Freddie Mac, Fannie Mae, and Veterans Administration loans.

FHA insured loans have been mentioned as a possible escape hatch for borrowers who may be unable to make payments on their current adjustable rate mortgages when their interest rates reset over the next year. The restrictive loan limits, however, make that impossible for many of those borrowers. There is also a theory that a more widely available federal guarantee would encourage lenders to make more loans in the current tight credit environment.

The FHA estimates that it may be able to help some 200,000 borrowers who are facing foreclosure with the new limits coupled with loosened underwriting standards which were announced by the president several months ago.

In October the House of Representatives passed legislation similar to that passed in the Senate but some differences between the two bills will have to be hammered out before a final version is sent to the president for his signature.

The House bill would raise the loan limit as high as $829,750 in certain areas of the country but the biggest stumbling block to a compromise is a feature of the House bill which establishes a new housing trust fund for troubled borrowers and would require FHA to contribute to it.

Also on Friday the Senate passed a separate borrower relief bill which would end, for three years, a provision in the tax code which has bitten many a homeowner after foreclosure or a loan workout. Under current rules the Internal Revenue Service requires lenders to send borrowers and the IRS a form detailing any loan amounts written off by the lender after a foreclosure, short sale, or loan restructure. The IRS treats that forgiven debt as ordinary income and taxes the borrower accordingly.

The FHA Modernization Act of 2007, passed last week by the U.S. Senate, aims to help protect the interest of America’s current and future homeowners by providing an important and safer financing option to riskier mortgage products which is believed to be safer.

It is also seen to provide assistance to homeowners who may be facing foreclosure, according to the National Association of Realtors.

The FHA has been able to help over 33 million families become homeowners since that time, but now it needs to be able to adapt to today's marketplace. With the passing of the FHA Modernization Act of 2007, more families will be helped. This new, modern-era FHA would provide many hard-working Americans a variety of homeownership options that are safer and at a fair price.

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, California said “A reformed FHA is positioned to help homeowners who face unaffordable mortgage payments as a result of resetting adjustable subprime loans and help bring stability to local markets and economies.”

“NAR commends the leadership of Majority Leader Harry Reid, D-Nev.; Senate Banking Chairman Christopher Dodd, D-Conn.; and Sens. Mel Martinez, R-Fla., and Richard Shelby, R-Ala., for passing the Federal Housing Administration reform bill, S. 2338, today” Gaylord added.

The FHA modernization was well supported by the NAR as this would increase loan limits, reduce or eliminate the statutory 3 percent minimum cash down payment, and give FHA increased flexibility and the ability to streamline certain programs. It also aims to strengthen the loss mitigation program.

“FHA can once again be a leader in providing safe loan products and preventing foreclosures by authorizing lenders to help borrowers who are in default. That assistance will make a substantial difference for many families that may otherwise face foreclosure,” Gaylord said.

In addition, the increase in FHA mortgage loan limits would help first-time home buyers, minority buyers, and people who do not qualify for conventional mortgages. Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable in these areas,” said Gaylord.

Gaylord noted that FHA has made mortgage insurance widely available to individuals regardless of race, ethnicity or social status during periods of prosperity and economic depression. The FHA program makes it possible for higher risk yet creditworthy borrowers to obtain prime financing. 
 

People are wondering which should stay in the house and which can be brought after a foreclosure. Personal property which is not real estate can be removed and brought by the previous owner. However, fixtures like chandeliers, built-in cabinets, windows, and wirings should stay as they are affixed to the land, to the house, which means fixtures stay with the house.

Even with that in mind, still some desperate home owners are still from smashing walls to rip out wiring or copper pipes and selling them for scrap in back alleys. Some misguided home owners, angry at the bank for foreclosing, think it's somehow permissible to turn the home into a total nightmare.

They don't stop to think about the consequences for the next set of first-time home buyers who have pinched, saved and worked hard to qualify to buy a home priced at the bottom of the market, in "as is" condition, from a lender who couldn't sell it on the county courthouse steps because the home was trashed by its previous occupants.

But that is not the last thing that could happen. The previous owners may be liable and can be sued. It's the home owner's insurance companies that are most likely to pursue and prosecute sellers who vandalize or strip their homes while in foreclosure. When the bank receives title to the home through foreclosure proceedings, many banks submit an insurance claim to the existing insurance company to cover damage and missing real property items.

Insurance companies then actively go after the sellers because the company has faced a loss due to the seller's intentional behavior. Believe me, insurance companies are relentless, committed to collection and will prosecute to the fullest extent of the law.

Vandalism of Homes in Foreclosure

It's not all right to spray paint the walls or windows with graphic images or tagging. I've seen homes where every window looked like it had been whopped by a baseball bat. Some previous occupants deposited feces on counter tops or in the middle of the living room floor. One can only imagine where other odors originated from. Sometimes home owners turn on all the water faucets and plug up the drains before departing.
People who vandalize a home they are losing through foreclosure are not harming the bank by their illegal actions. They are harming innocent home buyers who, just like they once were, are hoping to achieve the American dream of home ownership. In short, owners who trash their homes are hurting themselves.
It's senseless, it's stupid and above all, vandalism is against the law.

Here are some things that can not be removed and not removed.

Can not be removed:

• Cabinets and counter tops
• Appliances such as stoves, built-in microwaves, dishwashers, etc. 
• Furnaces and air conditioning units 
• Plumbing and copper pipes 
• Romex or other electrical wiring 
• Light fixtures and ceiling fans 
• Doors and hardware 
• Flooring, ceilings and walls 
• Windows and vents 
• Medicine cabinets, sinks, tubs, toilets and showers 
• Sink drains and faucets 
• Built-in shelving / bookcases 
• Landscaping, fencing, built-in pools and spas

Can be removed:

All personal items brought into the home by the owner such as furniture, clothing and common household items such as dishes, pans and silverware

• Mirrors 
• Personal artwork and photographs from walls 
• Stationary lamps 
• Pets and pet-related items such as dog houses, aquariums, bird cages 
• Easily removable window coverings such as drapes or curtains 
• Refrigerators, televisions, computers and stereo equipment 
• Throw and area rugs 
• Indoor plants 
• Portable fans and heaters