Fannie Mae to allow troubled homeowners to rent back homes

Mortgage titan Fannie Mae said it will begin allowing homeowners facing foreclosure to rent back their homes for up to one year in a move aimed at keeping a stack of foreclosures on its books from hitting the market, which is just beginning to show signs of recovery.

The new program is meant for troubled borrowers who don't qualify for or haven't been able to get a loan work-out, such as a modification, according to Fannie's news release.

Under the Deed for Lease program, the borrower would transfer title to the property to the lender by completing a deed in lieu of foreclosure and then rent back the house at market rates -- which in many markets have fallen over the last year and probably would be cheaper than a mortgage payment on a loan made during the boom years.

-- Alejandro Lazo

Photo: Rows of homes in Las Vegas. Credit: Bloomberg

Freddie Mac confirms: 30-year rate below 5% again

A Freddie Mac survey out today shows the average fixed rate for a traditional 30-year home loan was back below 5% this week.

It was the second industry survey in two days to show the rate below the threshold, which has become a psychological trigger for homeowners refinancing mortgages. A Mortgage Bankers Assn. report Wednesday said refis had jumped as the 5% barrier was crashed.

Freddie Mac’s survey, conducted Monday through Wednesday, showed borrowers with good credit and a 20% equity stake in their home were getting 30-year loans for $417,000 or less at an average fixed rate of 4.98%.

The borrowers were paying an average of 0.7% of the loan amount in upfront fees and points to the lender, the usual cost reflected in the Freddie Mac survey.

In the Western region of the country, which includes California, borrowers were buying down the average rate to 4.91% by paying 0.9 in upfront points to lenders, Freddie Mac said.

The rate was down a bit from last week, when it averaged 5.03%, and a lot from last year at this time, when the 30-year fixed-rate mortgage averaged 6.20%.

Fixed rates on 15-year traditional mortgages averaged 4.40%, Freddie Mac said, down from 4.46% last week and 5.88% a year ago. Borrowers were paying 0.6% in upfront costs for those loans.

-- E. Scott Reckard

Crashing the 5% barrier again

Interest rates for traditional home loans crashed the 5% barrier again last week, according to a report from a trade group released today.

And, just like that, demand for mortgages jumped back up, as more homeowners lined up to refinance their loans into a number starting with a "4," the survey by the Mortgage Brokers Assn. found.

The increase was from refinancings, not home buying, the trade group says in its survey. Applications for home loans increased by 8.2% overall from the previous week, but purchase applications fell 1.8% while refi applications surged 14.5%. 

The MBA says the contract rate for 30-year fixed-rate mortgages fell to 4.97% from 5.04% during the week that ended Friday.

Upfront points to lenders, including the origination fee, decreased to 1.01% from 1.25% of the loan amount. The survey assumed that borrowers had good credit and that the loans were for 80% or less of the home's appraised value.

The slight week-to-week drop in mortgage rates has a negligible effect on the cost.  Someone with a $417,000 mortgage -- the limit before you get into "jumbo"-loan territory and rates go higher -- would pay $2,230.91 a month for a 30-year fixed loan at 4.97%, versus $2,248.75 a month at 5.04%.

But when rates go back up again sometime in the future, who wants to brag: "Hey, remember back in 2009 when you could get a loan for less than 5%? I locked mine in at 5.04%!"

-- E. Scott Reckard

 

Home loan rates edge higher

Mortgage rates continued to drift higher this week, according to the latest survey from Freddie Mac, which reported today that the average interest on a 30-year fixed-rate loan was 5.03%.

That was up from a flat 5% a week earlier and an all-time low of 4.87% in the week that ended Oct. 8. The surveys assumed that borrowers with good credit were making a down payment of at least 20% and paying  0.7% of the loan amount to the lender in upfront charges.

Rates on shorter-term fixed mortgages and adjustable-rate loans also edged higher, Freddie Mac said. For 15-year fixed-rate loans, often used by older borrowers seeking to pay off their mortgages faster, the rate this week was averaging 4.46% with 0.6% of the loan balance paid in lender fees and points, up from 4.43% with similar upfront costs a week earlier.

For the full year, 30-year fixed rates have averaged just below 5% thanks to intervention by the government. Rates that low are unprecedented since Freddie Mac began its survey in 1971, propelling a refinance boom. Seven of every 10 mortgages this year have been refinancings, Freddie Mac economist Frank Nothaft said.

-- E. Scott Reckard

Bye-bye refis? Boom tails off

Demand for home loans is slipping a bit now that the average interest rate for traditional fixed-rate loans is back above the psychological trigger of 5%.

The latest survey by the Mortgage Bankers Assn., out today, shows that applications for home loans fell more than 12% last week. Applications to refinance homes were off by more than 16% compared with the previous week. Applications to buy homes were down more than 5%, the trade group said.

The average contract interest rate for 30-year fixed-rate mortgages during the week that ended Friday was 5.04%, down slightly from 5.07% a week earlier. As always in the Mortgage Bankers Assn. survey, the figure was for loans of up to 80% of the appraised property value. The trade group said that points paid up front (including the origination fee) were averaging 1.25% of the loan value, up from 1.13% a week earlier.

-- E. Scott Reckard

Average interest rate for a 30-year mortgage edges up to 5%, Freddie Mac reports

After three weeks in the sub-5% range, mortgage rates crept back to that benchmark during the week ending today, according to the latest weekly Freddie Mac survey.

Freddie's report said lenders nationally were committing to make 30-year fixed home loans at an even 5.0% rate on average. The rate was for traditional mortgages of up to $417,000 eligible for purchase by Freddie and its sister firm Fannie Mae. It assumes a 20% down payment, good credit, and that borrowers would pay 0.7% of the loan amount in points -- the upfront charges that lower rates -- and origination fees.

The average 30-year fixed rate as calculated in the Freddie Mac survey bottomed out at 4.87% two weeks earlier with similar points and fees.

Freddie Mac economist Frank Nothaft said consumers continue to seek the stability of fixed-rate loans, which remain extraordinarily low by historical standards, even though 5/1 adjustable rate loans -- mortgage fixed for the first five years before becoming adjustable -- could be had with an initial rate of 4.4%. Only 6% of mortgage applications in September and October have been for variable-rate loans.

You can study the ups and downs of mortgage rates at Freddie Mac's website.

-- E. Scott Reckard

Mortgage rates edge up, applications fall, trade group says

The surge in home refinancings triggered by rates that dropped below 5% last month appears to be tapering off.

Mortgage rates went up a little last week and applications for new home loans declined nearly 14%, the Mortgage Bankers Assn. said in its weekly report today.

The average rate rose to 5.07% for a 30-year fixed-rate mortgage from 5.02%, with points (including the origination fee) edging up as well, from 1.11% of the loan amount to 1.13%.

The figures assume that borrowers are making a 20% down payment.

Rates for 15-year fixed mortgages and adjustable loans edged up as well.

-- E. Scott Reckard

Mortgage rates creeping up, Freddie Mac survey shows

Fixed interest rates on home loans crept back up a bit in the week ending today, according to the latest survey by Freddie Mac.

The giant, government-controlled mortgage company said fixed rates for a 30-year loan averaged 4.92% with an additional 0.7% of the mortgage amount paid in upfront fees and points. That was up from 4.87%, also with 0.7% in upfront costs, a week earlier and down from 6.46% a year ago.

The average rate for a 15-year fixed-rate mortgage, a popular option for people refinancing to pay their loans off faster, was 4.37% this week with similar fees and points, Freddie Mac said. That was up from 4.33% a week earlier and down from 6.14% a year ago.

Despite the uptick, it was the third straight week in which typical 30-year rates as determined by the Freddie Mac survey were below 5%.

A separate survey by the Mortgage Bankers Assn. this week found that the typical rate had edged back up to 5.02%. The group expects the interest rate to rise to 5.6% by the end of next year.

Mortgage professionals say the surveys are useful as indicators of price trends. However, not everyone  should expect to obtain home loans at the rates in the surveys, which assume solid credit and 20% down payments.

-- E. Scott Reckard

Average 30-year fixed rate edges back above 5%; applications fall

The average rate on a 30-year fixed home loan edged back above 5% last week -- and down went mortgage applications.

That's the word in a Mortgage Bankers Assn. survey released today, which said applications for purchase loans slipped 5% from the previous week. Applications for refinance loans, which have made up about two-thirds of the total recently, were essentially flat, falling by 0.1%. Overall decline: 1.8%

The trade group's statistics assume a 20% down payment -- a lofty amount for many people.

But for borrowers who could hurdle that barrier, the average 30-year fixed rate increased during the week from 4.89% to 5.02%, with upfront points paid to lenders (including the origination fee) decreasing from 1.13% of the loan balance to 1.11%, the trade association said.

The average 15-year rate rose from a record low of 4.32% to 4.44% with points unchanged at 1.04% of the loan amount.

Rates for the 30-year slipped below 5% in the middle of last month, the Mortgage Bankers Assn. said, triggering a mini-boom in applications. The trade group said this week that it expects rates to average 5% this quarter but climb back to 5.6% sometime late next year.

Some mortgage pros say 30-year rates beginning with a "4" are a magic trigger for borrowers. What do you think?

--E. Scott Reckard

Gloomy outlook from top mortgage pros

Despite sub-5% loan rates and signs that home prices have bottomed out in some places, mortgage industry leaders at a conference in San Diego seemed decidedly downbeat when asked to get out their crystal balls for the economy and the industry’s prospects over the next year.

Charles E. Haldeman Jr., two months into his new job as chief executive of Freddie Mac, said he saw no signs that businesses – even those on solid ground – were going to start rehiring employees any time soon.

On the consumer spending front, the big driver of the U.S. economy, Haldeman sees a "permanent dislocation in consumption patterns." It was unclear exactly what he meant, but there was no doubt that it wasn’t good for home sales.

Fannie Mae CEO Michael J. Williams said lenders and loan investors would have to be judged on how effectively they dealt over the coming year with the messes they created through loose lending during the boom years. The focus will continue to be on limiting losses by trying to keep borrowers in their homes.

"We’ll all be rightfully focused on modifications and refinances," Williams said. "But to get the housing market moving again, it’s all about getting people to buy homes."

Dean Schultz, chief executive of the Federal Home Loan Bank of San Francisco, said he hoped things would look better in a year, but he wasn’t optimistic about that.

"I think we’re at the midpoint of a difficult period," he said, " which will stress all organizations."

The comments Monday came at the Mortgage Bankers Assn. annual meeting in San Diego, which continues today with speakers including Barbara Desoer, president of Bank of America’s home lending and insurance operations.

In an interview, Desoer said more than 40% of Bank of America’s new mortgages are for home purchases. But that doesn’t mean a universal recovery in housing, only that prices have been beaten down so far that in some markets – particularly lower-priced areas where values have fallen the most – first-time buyers and investors are stepping in to buy perceived bargains.

Those areas include inland areas of California, but not certain other battered areas, Desoer said. In Florida, for example, another big boom and bust state, there’s no sign that the bottom has been reached anywhere.

Economists at Charlotte, N.C.-based Bank of America, which collects payments on more mortgages than any other lender, think prices nationally have another 5% or so to fall before bottoming out – perhaps – in the second quarter next year.

And then, Desoer said, a slow and uncertain recovery may unfold. She said the bank would be on guard for a double-dip recession or what could be a replay of the "stagflation" of the 1970s – a stalled economy with inflation.

-- E. Scott Reckard