Mortgage News | Refinancing Articles

Fannie Mae, one of the two government-sponsored home mortgage giants in the U.S., has reportedly cut down the amount of financial assistance it is asking from the government. Following this news, real estate market analysts declare that this could mean billions of dollars less from taxpayers' burdens.

According to market analysts, the cost of bailing out the two mortgage providers following the foreclosure crisis had been shouldered by American taxpayers. With Fannie Mae's statement on less financial assistance, analysts are optimistic that tax payment problems faced by U.S. residents will somehow diminish.

The company has reportedly stated that it has enough money set aside to cover the losses incurred from unpaid mortgage loans between the years of 2005 and 2008. The firm reportedly asked for taxpayer aid worth $1.5 billion, less than what was expected, following its strongest quarterly result since September 2008 when it was first put under the control of the federal government. The amount is also the smallest financial request by quarters since November 2008.

Despite analysts' belief that the lower amount will help taxpayers, they still cautioned that there is a chance that the home mortgage company's finances will weaken some time in the near future and it might need to ask for a more substantial financial aid from the government. Real estate market observers have stated that foreclosure rates are threatening to rise further in some areas of the U.S. They added that the lower rates of foreclosures during the first half of the current year have been masked by the tax incentive and the delay in banks' processing of foreclosure cases.

Fannie Mae officials have revealed that the firm's loss for the April to June 2010 quarter totaled $3.13 billion, a figure that is significantly lower than the $15.2 billion worth of loss recorded during the same period of 2009. The current loss amount also took into consideration the paid dividends to the Department of Treasury which was worth $1.9 billion.

Officials from the home mortgage giant also said that improving lending and buying behaviors within the housing industry have made a lot of difference to the company's financial status and present a more positive future for the real estate market.

There are more hurdles for mortgage brokers in Florida to overcome when the state starts implementing the rules arising from the Secure and Fair Enforcement for Mortgage Licensing Act on October 1.

Under the new law, mortgage industry professionals are required to renew their licenses once every year by reapplying and submitting new criminal background reports and new credit reports each time.

License applicants also need to take a national mortgage licensing exam, in addition to the state exam. There would also be continuing education course requirements in some cases. Application for licenses under the new program will start on October 1 and end on December 31.

According to the Florida Office of Financial Regulation, license processing normally take three or four months, but with the expected flood of applications in the fourth quarter, processing may take several months to a year to process all applications.

According to several mortgage brokers interviewed, some of the requirements are too harsh and could make a number of mortgage professionals jobless. They argued that there are good and honest mortgage brokers who are going through financial difficulties because of unexpected events in their lives.

The case of a mortgage brokerage owner who is at risk of losing her home and car due to tight business conditions, but who has worked with integrity for almost two decades in the mortgage business is an example.

In response, proponents and supporters of the new licensing rules explained that the new law will help prevent conditions in the mortgage sector that led to the crisis. They said that a significant number of mortgage professionals during the housing boom offered risky mortgages to borrowers and did not follow standard underwriting guidelines.

Under the new program, every mortgage file will record the identification number of every person handling the file, so any mistake or misdeed will be traced back to the doer.

Throughout the country, some mortgage brokers are now rethinking their careers and pondering whether they have enough passion to continue in the mortgage industry despite additional challenges.

Fluctuation in the stock market and the ongoing debt crisis in Europe have contributed to dragging the mortgage loans rates in the U.S. to an almost record low. For homeowners seeking refinancing, analysts are saying that now would be as good a time as any.

However, market analysts are predicting that this opportunity might disappear soon once investors regain their confidence and decide to move their money out of government bonds, a primary factor behind the movement of mortgage rates.

Real estate market observers have asserted that homeowners and borrowers should take advantage of the low rates of mortgages, with 30-year fixed rate loans declining to 4.78% during the last week of May. This makes it the lowest rate for the whole 2010. Fifteen-year mortgages are also at their lowest level in the past two decades.

According to the Mortgage Bankers Association, some homeowners did heed the encouragement of market analysts, with applications for refinancing rising in the last week of May to their highest number in the past seven months.

Market observers have stated that investors have become worried over the debt crisis in Europe, leading them to focus their attentions on Treasury bonds. This type of investment is being viewed right now as a safer option than other forms of investments. As a result, yields of Treasury declined, taking mortgage loans rates with them.

Despite the low rates of mortgages, loans for buying residential properties remain at their lowest in over 13 years. This trend has been explained by market observers as the result of the tax incentive which expired on April 2010. According to analysts, many homebuyers already closed purchase contracts before and right at the deadline date of the tax credit.

In addition, some homebuyers are finding it hard to secure financing since banks have made qualifying for a mortgage even more difficult than before. Homebuyers are required to have a good credit history and are being asked for down payments of at least 3.5%. Tighter lending rules, analysts have stated, are direct results of banks learning their lessons from the housing market bust that started a few years ago.

Housing market experts have warned homebuyers and homeowners seeking refinancing to take advantage of the low mortgage loans rates. According to them, if the country’s economy continues to recover, investors will likely move into stocks and drop out of bonds, which would make mortgage prices return to high levels.

Financial companies Bank of America, Wells Fargo and JPMorgan Chase are expected to record almost $30 billion of combined losses from home equity loans. The estimated loss amount is almost the same as the projected profits of the banks for 2010 as predicted by financial industry analysts.

Government home loans are still relatively the most affordable loans in the country. There was even a time in the early months of the foreclosure meltdown that they were the only home loans being offered to borrowers by banks as these loans were guaranteed by the federal government.

Financial companies are choosing foreclosures over short sales because of the difficulty and time in working out complex transactions in short sales, according to realtors and homebuyers.

Any mortgage company found to have issued defective home loans is being forced by mortgage financiers Fannie Mae and Freddie Mac to repurchase the loans.

FHA loan mortgage defaults are expected to continue in high cost communities in California because of the rising number of high cost loans guaranteed by the Federal Housing Administration in the state.
The FHA has been insuring loans not only in high cost neighborhoods; it has also been insuring mortgages covering four-unit residential units purchased [...]

Refinance mortgage loans now as rates fall below 5 percent again.
According to the Mortgage Bankers Association, rates for fixed-rate 30-year mortgage loans dropped below 5 percent – the first time rates fell sharply over the past 4 weeks.
The MBA also reported that the volume of mortgage loan and refinancing applications rose during the week ended [...]

The federal mortgage loans refinancing program has produced disappointing results seven months after it was launched to help struggling homeowners who have no or little equity refinance their loans.
So far, the refinancing program has helped no more than 3 percent of its targeted number of struggling borrowers, prompting industry experts to say that the [...]