Mortgage rates TUMBLE November 25, 2008
Posted by loanarranger in Uncategorized.Tags: Countrywide, mortgage backed securities, mortgage rates, rates falling
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The Fed is finally buying some mortgage backed securities today —- so that means that mortgage rates could fall to 5.0% for a 30 yr fixed from some lenders today.
That’s good—however, Countrywide is finding that 60% of defaults are from people that own MORE THAN ONE HOME, and that high interest rates are not causing defaults, it is lack of income from loss of a job. Normally people can sell their home and start over, however, many find that they have no equity left in their home.
But do not intentionally stop making payments, your credit score will be devistated and there will be no remedies available.
If what is true with Countrywide that 60% of defaults are from people that own more than one home and the problem is the inability to pay both mortgages because of a layoff or (job relocation, which is what I have seen also) – then the other lenders are undoubtedly having similar results with their default buyers. So.. if that is the case, then why does the fed, not look at this fact and try to do something to help these folks (the ones who have a job loss DUE TO NO FAULT OF THEIR OWN, and the folks who have been relocated DUE TO NO FAULT OF THEIR OWN), and not concentrate on lowering the rate or helping the banks which are taking a lot of losses due to simple non -payment of loans from clients who have made bad choices with their finances, not once but many times over? The banks need help, but I would not like to see the banks receive a bailout for loans that should have never been given, but help to those loans with the situation of a very well qualified, high credit score buyer that truely did have a hardship based on the economic situation currently with the job layoffs and the decrease in value of their recently purchased homes. I as a public citizen would rather help the folks that are trying to make their payments than those who are not making payments. I have heard customers say that their bank told them they could not do anything to help them until they were at least 45 days late on payments, and that they should not be making payments if they expected to receive help. I do not think that is fair to any of the publics use of funds. I am currently having a very difficult time making payments due to the lack of Real Estate transactions, but my mortgage is not a payment I would consider to stop paying. I would rather live on beans and rice and work several jobs, open my home to a boarder, etc. to keep from losing my home. (which I hope it does not come to that-but I’d rather do that then stop making payments, just so the bank would decide to help me) Also, why shouldn’t folks be encouraged to make partial payments at least, whatever they can do., and not be penalized for making an effort!
Countrywide lost a lawsuit in Washington State which mandated that they offer customers a better rate. So they have the longest track record in Customer response. IndyMac also aggressively is calling old customers in trouble. Last week it was also revealed that many of the people that got help with their mortgages are back into foreclosure.
Of course to REFI to ANY interest rate, you need a job and a good debt to income ratio.
The good news is that now many lenders are giving people that are NOT late on their payments a better interest rate. Call your lender, ask for the loan modification office (not customer service) and see what they will do.
More good news, if you got a FHA loan, you can now REFI without paying the 1.75% UFMIP charge.
Burt Suzanne, I would call your mortgage servicer tomorrow to see what they offer —- it will not be hard at all to prove to them that your business is down right now!
As a real estate professional I am in agreement that it is a travesty that responsible people who can see that financial freight train bearing down upon them have not had any way to take pro-active measures. Banks don’t want to talk to them until they are behind and then it is usually too late. With all of the bail out talk and the supposed assistance to borrowers I do not see much taking place that truly helps those that need it. Partial payments would really be an answer for some people who are strapped for cash due to job loss, illness, etc. Just tack that unpaid balance on to the back of the loan to be made up, even if it is in the form of a “balloon” payment. Or, a modified payment plan that would allow the deferred amount to be made up when things improve for the borrower. Too simplistic I suppose.
Brace yourselves for the next wave of foreclosures. I believe those folks impacted by job losses due to the state of finances in corporate America are yet to hit.
I agree, the mortgage industry will be offering record low mortgage rates —below 4%–soon, but they want only the best borrowers. You must have a high credit score, low debts, and equity in your house.
Indications are that foreclosures will SKYROCKET in the next 3 months—because STATES are stopping foreclosure action for 90 days —- which will blow up in statistics in 90 days. If you don’t have a job now, you won’t have one in 90 days.
It’s going to be a very WILD 2009 — since no one in gov or industry has a CLUE what to do!!!
Do you really think rates will go below 4%?
As Realtors we all know that what has been is said is very true. But have you stopped to really think about the huge administrative task it is to redo these loans? It takes 30 days in a good market to get a new loan when supply and demand were in balance. There is no way the banks or the Feds can undertake this huge problem without an enormous amount of qualified staffing. That’s the problem that really needs to be solved.
The residential decline in its infancy! No one, and I mean no one, has any idea how badly the housing mess will continue to deteriorate and/or end up. It is pure guessing at this stage
The lenders have increased their spread on mortgage rates because no one knows what the downside risk is on new mortgages—housing prices continue their decline. The government keeps saying they have a plan to lower rates, but it is said to put confidence in the consumer. Today, Tim Geithner said that they had a plan–but no specifics on what they will do==as a result he stock market lost 381 points and dropped to a new low of 7,888.88
Everyone is HOPING that the lenders try to prevent foreclosures by modifying loans==so the taxpayers don’t get stuck with all these upside down mortgage loans.