Posted by Jonathan J. Miller -Tuesday, April 24, 2012, 11:11 PM
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It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world. And I’m simply here to take measurements.
Read today’s 3CW post on Curbed New York:
By far the three most popular observations about the Manhattan housing market to date in 2012 are: “mortgage rates are at historic lows” and “listing inventory is tight” and…ok, there are just two that are worthy.I thought I’d mash them together and see what happened since I’ve never made the direct association. Admittedly I was surprised with the visual that resulted….
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Its announcement Thursday that it would buy up to $40 billion in agency mortgage-backed securities every month, with no clear finish line, says loud and clear that the Fed thinks housing needs more stimulus. (Read More: 
For those of you who expected to wake up to a 30-year fixed rate mortgage below 3 percent, you may as well go back to sleep. Yes, rates moved down, 0.125 percent, according to several sources, but that was not as low as some had predicted. Remember, we hit the low of 3.49 percent in July, but then we jumped back into the mid to high threes. (Read More: 
] backed loan, you’re not eligible. There is a push by Democrats in Congress 
It was barely a few weeks ago that mortgage rates were sitting at record lows. The idea of rates over 4 percent on the 30-year fixed seemed a distant memory. And here they are now at 4.05 percent on the Bankrate.com overnight, thanks to the recent rise in 
Barely two weeks into a new government program that allows severely 
"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks," the President announced in his State of the Union address.Unlike previous efforts in the refinance space, including a recently revamped and expanded government program for borrowers who owe more on their mortgages than their homes are currently worth, this plan would not be limited to those with loans backed by Fannie Mae and Freddie Mac, according to senior administration officials. The two mortgage giants own or guarantee about half of the nation's mortgages. It would be open to all borrowers current on their loans.The Obama administration is offering precious few details, promising more in the coming weeks, but several sources say the plan is to ask Congress to allow the government mortgage insurer, the Federal Housing Administration (FHA), to back refinances of underwater mortgages. No estimates were given as to how many borrowers such a plan could potentially help, only that this would be a voluntary, borrower-initiated plan, and not a blanket refinance of all borrowers.The costs, according to administration officials, would be modest, and the President would request that a portion of his financial crisis responsibility fee offset any of those costs, so there would be no addition to the federal debt. "A small fee on the largest financial institutions will ensure that it won't add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust," Mr. Obama added.Loan servicers could be faced with a flood of applications and could have to add resources to handle it all, but officials say the opportunity to generate revenues from the refinances would be incentive enough. Still many servicers have balked at the idea of mass refinancing, as the new loans could present more risk and less reward.The idea is to remove the barriers and "frictions" that have kept many borrowers out of refinancing to historically low rates. Some of those include high levels of negative equity, loan level price adjustments, loan origination dates, put-backs on loans that default, and borrower qualifications. Then there is the very basic problem of politics. Whatever the details of the plan are, Republicans, despite the fact that they have been calling for more refinances, are unlikely to hand President Obama a popular victory on the eve of a presidential election. They may also oppose anything that makes Fannie Mae and Freddie Mac bigger, when the two are allegedly winding down.Questions? Comments? document.write("
Peter Gridley | Photographer's Choice | Getty ImagesLate Friday the U.S. 
Down payments are a big part of that, as most mortgage market experts will say you can't get those great low rates today without putting down at least 20 percent, and more if you need a jumbo loan. That's why 
For weeks now we've been touting new record-low rates on 15- and 30-year fixed mortgages. They're floating around four percent, dipping below four when Europe explodes, then back just above four percent this week, as the stock market makes a turnaround. Whatever the exact daily rate, the message is that the rates are a steal, and they should make home refinancing and home buying a steal. Not so much. The problem is that these low rates are not going to the borrowers who need them the most, and even worse, these rates should actually be lower than they are. “When there’s a rush of refinancers, lenders become flooded with volume and can adjust rates to slow their pipelines and increase margins,” says LendingTree Chairman and CEO Doug Lebda. “It becomes a matter of supply and demand, which unfortunately means borrowers are seeing higher rates than what’s being reported.” Lending Tree looked at spreads between the 10-year treasury rate and the average national rate on the 30-year fixed a few weeks ago, when rates were nearing record lows. "The 10-year treasury rate was at 1.88 percent, while the average national [mortgage] rate was at 4.03 percent. An alarming 215 basis point spread (compared to the 153 average basis point spread seen over the past 10 years) means that the full benefit of these low rates aren’t getting to consumers." While mortgage volume is at historically low levels, there has also been a mass exodus of mortgage lenders from the market, partially due to new government compensation policies that went into effect last Spring. "It had the effect of driving some of the best and most qualified loan officers out of the business," says Lebda. To make matters worse, the consumers who are getting the best rates are those who need those low rates the least. "Two of every three mortgage refinancings done by banks and guaranteed by the GSEs since 2008 have gone to higher 
] , Bank of America [BAC Loading... () 
Tom Grill | Photographer's Choice RF | Getty ImagesI can't get off the phone with anyone I know without first having to hear about their particular mortgage story; Okay, maybe that's an exaggeration, but not that far off. The first I heard this morning was about a mortgage broker in Annapolis who is so busy he can't answer all the phone calls coming in. That is because more borrowers are rushing to refinance yet again, as mortgage rates dipped on bad news last week in the world economy and the Federal Reserve's announcement that it would get back into the business of buying mortgage backed securities from Fannie Mae and Freddie Mac. It's not a sign that home buying is surging. What was more interesting was the phone call with a producer at CNBC this afternoon, who told me that she is trying to refinance but getting wildly different rate offers from the different lenders she has contacted. This story jibed with 
Source: Mortgage Bankers AssociationAnd then there's the fact that nearly a third of home buyers in August were all-cash, and that share is in fact rising yet again. Mortgage industry types I talk to say the banks do want to lend, they're just forced into strict guidelines by Fannie, Freddie and the FHA that make their pool of potential customers smaller. I realize that's not great for the mortgage business, or, given what got us here in the first place, is it? Questions? Comments? document.write("
David Papazian | Brand X Pictures | Getty ImagesWhat's the bright side to a 
It's not like the housing market needs any more headwinds, so here's the government potentially giving us another: The mortgage interest deduction is back in big play in the budget deal. It never exactly came off the table, but the bigger the budget deal, the more likely the mortgage deduction will take a bigger hit. Right now, home loan borrowers can deduct the amount of interest they pay on their mortgages from their taxable 
Andrew and Peggy Sheren can't resist a good deal, especially when it comes to financing their McLean, Virginia home. "We’ve gone from an interest rate from something like greater than 6 percent down to the lowest interest rate we currently have is three and an eighth percent," Andrew remembers. They have refinanced their home four times in four years, taking equity out only the first time for a renovation, but essentially cutting their interest rate in half. Negative economic reports of late have pushed the rate on the popular 30 year fixed to below 4.5 percent, the lowest this year and just about a quarter percent off the 50-year lows we saw last summer; adjustable-rate products are even lower. When investors see bad economic news, they pull money out of the stock market and park it in bonds. The price of bonds goes up, the yield goes down, and mortgage rates follow down. "If we see continuing demand in mortgage backed securities, we’ll see further pushes lower. If we see continued doses of bad economic news, the stock market taking beatings, we don’t see positive economic news, continually bad jobs reports and previous months of jobs reports revised lower as we saw last week, then rates will continue to push down as we see that," says Craig Strent, CEO of Apex Home Loans, a small mortgage lender in Rockville, Maryland. Strent has seen a big surge in refinance requests in just the past few weeks. Nationwide, refinancings are climbing as well, while mortgage applications to purchase a home remain flat at very low levels. Strent, who obviously sells mortgages for a living, says regardless if you've already refinanced, you can still stand to save money over the long term. "If you look at how much can I save in my interest costs and how much will it cost me to do it, and how long will it take me to breakeven and recover those costs? Am I going to be living there that long? And if the answer is yes, it’s going to make sense to refinance," advises Strent. That's why the Sheren's keep going back to the table. They have gone from a fixed-rate loan to an adjustable rate mortgage on their Virginia home and have also refinanced the loan on a property they own in California. By making some changes to the loan value and term, they have been able to do this at little to no extra cost. "We did a refinance in California where we actually got negative closing costs," boasts Andrew Sheren, adding, "I think that’s where we did pay half a point." The trouble of course is that one in five borrowers owe more on their homes than their homes are currently worth. 10.9 million, or 22.7 percent of borrowers were in this negative equity position, or so-called "underwater," position at the end of March, according to a report out this morning from Core Logic, and while negative equity is improving in some of the hardest hit states, it is getting worse in states you might not expect. Nevada still has the highest rate of negative equity, but in New York, borrowers are underwater by the most, an average $129,000. Being in a negative equity position makes it far tougher to refinance. There are government programs through Fannie Mae, Freddie Mac, and the FHA which offer underwater borrowers a chance to refinance, but there are many qualifications that many borrowers don't meet. Some borrowers are choosing to do cash-in refinances, where they are putting more money into the mortgage, the opposite of what happened during the housing boom. This helps them get a better rate. Unfortunately, the borrower who need to refinance most, likely can't. But for those who can, it can make sense, over and over. "Nobody gets rich, so far as I know, through refinancing, but what you do do is you save cash flow," says Andrew Sheren. Questions? Comments? document.write("
As we've seen before, there's more than one way to not pay a mortgage. The 
If you're 
Yesterday I had the great opportunity to moderate a symposium on mortgage liquidity with a pretty heavy panel of mortgage bankers and industry executives. I knew they would be guarded in their answers, as I asked about the new world of underwriting, the wind down of Fannie Mae and Freddie Mac, the tighter more expensive FHA, new federal regulation in the industry and a controversial new appraisal process. And they were guarded, until I opened up the floor to the Realtors, who hammered them hard on foreclosures, short sales, and mortgage credit for independent contractors like themselves. A Realtor from Wilmington, NC asked what are the plans for companies to put the shadow (foreclosed) inventory onto the market? Most agents believe banks are holding on to these properties to somehow game the market, but the bankers were firm in their rebuttal: Cara Heiden/Wells Fargo [WFC Loading... ()