Mortgage Rates and Weekly Financing update 6/10/2011

I would like to thank seasoned Mortgage Broker Jennifer Buchanan of Metlife Loans  for posting mortgage rates again this Friday, as a guest contributor to update you on the current interest rates and trends. Please feel free to contact Jennifer for any mortgage questions that you may have, and know that she and I work closely together as a team to help you reach your goals.

Fixed mortgage rates fell for the eighth straight week in the widely watched Freddie Mac survey of what lenders are offering to well-qualified borrowers.  The 30-year fixed-rate mortgage averaged 4.49% this week, down from last week when it averaged 4.55%, Freddie Mac said.  Freddie Mac economist Frank Nothaft said a weak jobs report had pushed down yields on long-term Treasury bonds. Those debt securities are a benchmark for home lending rates, and mortgage rates followed suit
This week mortgage experts examined the 10 year Treasury note charts due to its ideal role as a benchmark of the general "bond market."  While it's true that loan pricing is derived from MBS,  or mortgage backed securities the goal was to examine long-term, big-picture movements.  The highest yield levels of 2007 through present day lie roughly along the same line. There appears a near perfect parallel line that, with the exception of the initial panicked flight-to-safety in 2008 and the repeat performance in 2010, the 10 year Treasury note charts contains every last bit of trading since the crisis. 

This is one of those times where technical analysis really is saying something very clear about the future: we're either in for an unfriendly bounce, or we're looking at the possibility of rates going lower. 

Plain and Simple: The revisiting of a long term technical level coincides with several other uncommon market dynamics, including the end of QE2, this is combining to create a perfect storm where rates are "on the ledge, poised for directional volatility.  Best advice, if you are purchasing or refinancing, work with a lender who has real time live MBS market data streaming to them so you can lock if the market starts to move into negative territory.

Mortgage rates this week:

30 year fixed - 4.375 %  with  .250%  points for rate
20 year fixed - 4.125 0%  with .250% points for rate
15 year fixed - 3.625% 0 points for rate
10 year fixed - 3.250% with 1.00 point credit to borrower for rate
5/1 ARM - 2.75% - 0 points for rate
7/1 ARM - 3.125% - 0 -points for rate
Jumbo - over 729,000
30 year fixed - 4.99% 0 points  for rate
15 year fixed - 4.50% - 0 points for rate
5/1 ARM - 3.50% - 0 points for rate
7/1 ARM - 4.00% - 0 points for rate

About Jennifer Buchanan:

    Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.
   Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.
   Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
    She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

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Seller or Owner financing, and the term "taking back paper" - Do's and Don'ts

Seller financing is defined as a  loan provided by the seller of a home to the purchaser. It could be for a portion of the sale amount, or for the entire purchase less a downpayment. The buyer would then make monthly installment payments over a specified time until the loan is fully repaid at an agreed-upon interest rate.

A seller take-back is just like a loan from any lender. It must be repaid according to the terms and conditions outlined in the note. If not repaid, the property can be foreclosed upon, just like with a bank.

Have an attorney prepare and review the take-back/seller financing  loan papers before signing anything. If you are a seller, insist on seeing a buyer’s credit report and past tax information — just like any lender. And be sure that any loan arrangement is written according to terms which are satisfactory to your attorney.

There are benefits and drawbacks to both parties.

BUYER BENEFITS:
It may be the only way that you can purchase a home at this time.
Both the buyer and the seller can quite possibly save a lot of money in closing costs. The seller conveyance tax on property is going up as of July 1, 2011. It might help your case!
You  can negotiate an interest rate, repayment schedule, and other conditions of the loan, not like with a bank
 You , as the borrower would not have to pay PMI insurance unless required by the seller, and as a bonus, you do not have to go through a bank's loan underwriting department, who usually places conditions of the loan with your approval, if you can get one. .
 
BUYER DRAWBACKS:
You could pay the loan  back in full but still not receive clear title due  to encumbrances, items not divulged by or unknown to the seller, or the seller disappears. He would have to file a release of lien for you to be able to sell the home when you want to.
You may not have had the privilege or right to obtain the protection of a home inspection, mortgage insurance, or an bank appraisal to ensure that you are  not paying too much for the property. Make sure this is part of your agreement.
Make sure that you hold title to the property with a seller note. If you don't and he defaults on his current loan, or has encumbrances on the property that you are not aware of, YOU will be kicked out, and your money lost  if he goes into foreclosure.

SELLER BENEFITS:
The seller can receive a higher yield on his/her investment by receiving equity with interest, if negotiated that way.
The seller could negotiate a higher selling price  as well as higher interest rate.
The property could be sold "as is" so there will be no need for repairs.
The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.

SELLER DRAWBACKS:
The seller might not get the buyer’s full credit or employment picture, which could make foreclosure more likely.
Depending upon whatever security instrument that was used, foreclosure could take up to a year or longer, if unfortunately needed.
The seller could agree to a small down payment from the buyer to try and help out the buyer and to make the sale, only to have the buyer abandon the property because of the small investment that was at stake.

Seller-financed sales can be good, as long as it is a win-win situation for all parties- good for both seller and buyer.  NEVER attempt to enter into a transaction like this without the assistance and guidance of your attorney.

GREAT COMMENT BELOW BY JENNIFER BUCHANAN- PLEASE READ

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Today's Mortgage Rates 6/3/2011

I would like to introduce seasoned Mortgage Broker Jennifer Buchanan as a guest blogger to update you on the current interest rates and trends. Please feel free to contact Jennifer for any mortgage questions that you may have, and know thatshe and I work closely together as a team to help you reach your goals.

Mortgage Update:

A week of troubling economic data helped push fixed mortgage interest rates to a new low for the year, representing the seventh consecutive weekly decline, according to the latest survey from Freddie Mac.  Surveys of national consumer confidence and manufacturing activity in the past month have suggested the economy may be slowing.  The S&P Case-Shiller National Home Price Index, meanwhile, showed first-quarter home prices fell by the steepest annual rate since the third quarter of 2009.The 30-year fixed-rate mortgage averaged 4.55% in the week ended Thursday, down from 4.60% the prior week and 4.79% a year earlier. Rates on 15-year fixed-rate mortgages fell to 3.74% from 3.78% the previous week and 4.20% a year earlier. Five-year Treasury-indexed hybrid adjustable-rate mortgages held steady from last week at 3.41%, but are down from 3.94% a year earlier. One-year Treasury-indexed ARM rates rose to 3.13% from 3.11% the prior week but are down from 3.95% a year earlier.

30 year fixed - 4.50% - 0 points for rate
20 year fixed - 4.250% - 0 points for rate
15 year fixed - 3.625% 0 points for rate
10 year fixed - 3.250% with 1.00 point credit to borrower for rate
5/1 ARM - 2.75% - 0 points for rate
7/1 ARM - 3.250% - 0 -points for rate
Jumbo - over 729,000
30 year fixed - 4.99% 0 points  for rate
15 year fixed - 4.50% - 0 points for rate
5/1 ARM - 3.50% - 0 points for rate
7/1 ARM - 4.00% - 0 points for rate

About Jennifer Buchanan:

Jennifer Buchanan,  Certified Mortgage Planning Specialist at MetLife Loans is a seasoned veteran of the Mortgage, Banking and Broker Industry and specializes in mortgage loans throughout Fairfield County, Connecticut.

Her attention to detail is unsurpassed, and her understanding of the marketplace makes it easy to find the right loan to fit her clients specific needs .  Jennifer's local processing and closing team are also known for their exemplary service.

Understanding that the vast majority of mortgage brokers never discuss the long or short term  financial needs or goals with their clients, she set herself apart from the rest by obtaining the coveted CMPS  designation. (Certified Mortgage Planning Specialist)
 
She is a member of the National Association of Responsible Loan Officers, and her commitment to ethics, understanding of the marketplace, and business acumen have earned her the respect of her peers and clients alike.

Jennifer Buchanan
Metlife Loans
203-341-6949

What is PMI, why is it necessary, and how is it calculated?

PMI is the acronym  for "Private Mortgage Insurance", and is sometimes also referred to as "Primary Mortgage Insurance". It is insurance required by a lender for your home loan when you do not have a  twenty percent downpayment, which is considered a conventional loan. Buyers with less than 20% downpayment who require an 80% or more LTV loan (loan to value ratio) are almost always required to purchase this insurance for the lenders protection against a possible default on your primary mortgage.
 
Lenders typically look at a loan with over 80%  LTV as a riskier investment and  will require a PMI payment from the borrower. It is a special insurance that lenders force higher risk borrowers to pay to protect the interests of a bank in case of default.

A benefit of PMI is that it with this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment, when otherwise it would not have been possible. This means that you can buy a home sooner without accumulating a larger down payment.

Use the handy chart to the left  to estimate what your monthly PMI payment will be  for your thirty year mortgage loan. Your mortgage broker or banker will give you the actual monthly payment, and this chart is meant to be used as a rough guide.

Do you need a Mortgage Modification? READ THIS FIRST!

This article is so important and informative about Loan Modifications and Scamming practices to watch out for,  that I just want to share it with you, or anyone else that you know that might need a little information on modifying their loan.

SOURCE ( National Fair Housing Alliance) – Four fair housing organizations released their findings of a year-long undercover investigation of 80 loan modification companies, which reveal an industry rife with corrupt practices.  The National Fair Housing Alliance, the Connecticut Fair Housing Center, Housing Opportunities Made Equal of Virginia, Inc., and the Miami Valley Fair Housing Center issued a report entitled, “Have I Got a Deal for You!  An Undercover Investigation of Mortgage Loan Modification Scams,” which documents the tactics mortgage modification scammers use to take money from vulnerable homeowners.  An analysis of the 80 loan modification companies uncovered common tactics used by scammers to entice homeowners to use their services:

• 55% required an upfront fee to start work or required a low initial fee to conduct minimal work on behalf of distressed homeowners, such as reviewing loan documents;
• 43% guaranteed or promised they could secure a loan modification even before learning about the homeowners’ financial limitations;
• 24% advised or encouraged homeowners to stop making their mortgage payments or to stop contacting their lenders;
• 16% guaranteed a new, much lower interest rate ranging between two and 6 percent on modified loans;
•  12% discouraged homeowners from seeking free help from government-approved housing counseling agencies;
• 8% encouraged homeowners to provide fraudulent information to their lenders.

“This is shameful abuse by loan modification scammers to take advantage of desperate homeowners,” said Shanna L. Smith, NFHA President and CEO.  “We and our partner organizations will work to see to it that these companies are prosecuted by the Federal Trade Commission and other federal and state enforcement agencies.”

With one in nine homeowners nationwide more than 90 days behind on their mortgage payments, a lucrative industry of mortgage modification and foreclosure prevention scams has emerged.

Investigators working on behalf of the fair housing organizations captured scammers saying things like:

    “I’d be breaking the law if I told you to stop paying your mortgage, but friend-to-friend, you won’t get a loan modification until you are behind on your mortgage.”
    “If you don’t qualify, we modify expenses for you. They [the lenders] don’t check it.  No one knows what you spend on groceries.  We make you qualify by playing with the numbers.”

Among other recommendations, the fair housing organizations call upon the financial services industry to recommit itself to providing sustainable loan modifications so consumers do not have to turn to scammers; they call upon the Federal Trade Commission to strengthen its new MARS regulation to prohibit upfront fees for all loan modification companies, including law firms; and they call for strengthened enforcement and education efforts by the federal government.

To read the full report, go to www.nationalfairhousing.org.

About the National Fair Housing Alliance (www.nationalfairhousing.org)

Founded in 1988, the National Fair Housing Alliance is a consortium of more than 220 private, non-profit fair housing organizations, state and local civil rights agencies, and individuals from throughout the United States.  Headquartered in Washington, D.C., the National Fair Housing Alliance, through comprehensive education, advocacy and enforcement programs, provides equal access to apartments, houses, mortgage loans and insurance policies for all residents of the nation.

SOURCE National Fair Housing Alliance