Weekly Recap (11/8/10-11/13/10by Tim Manni
Financial stress can be devastating. Studies have shown that financial stress is one of the main causes of divorce. But in today’s society, the past stresses we’ve seen caused by credit card debt seem to have been replaced with the stress brought on by foreclosures. The stress has grown so great for some that we’ve even read reports of borrower suicide.
But this week, a Baltimore woman dealt with her upcoming eviction in a way I haven’t yet seen or heard of: a hunger strike.
When the robo-signing scandal first came out in the open, I assumed most of the foreclosure filings would be reviewed and we’d realize that most were legitimate and we’d quickly go back to normal. As time wears on, the market distortions have become far more apparent.
The latest foreclosure numbers which came in this week showed a decline in foreclosure filings for the month of October. Good news, right? Not exactly. The only reason for the decrease was due to the foreclosure moratorium that took place after the robo-signing scandal became known.
In honor of Veterans Day, I thought I’d go over some of the particulars of a VA home loan. Think of VA loans as one small way our country tries to honor our veterans for their service through an easily-accessible mortgage program, one which even offers a streamline refinance choice.
What is a VA loan?
VA loans are mortgages designed and designated for America’s servicemen and servicewomen. Just as Fannie Mae and Freddie Mac guarantee conventional loans against loss, VA loans are fully backed by the United States’ government.
It’s not as though I expect the underwater crisis to go away anytime soon, but I have to admit that I’m still a little surprised when I hear the number of underwater borrowers is growing. Perhaps I’m most shocked that Washington still hasn’t designed a meaningful program to help these borrowers refinance to today’s low mortgage rates.
Is the current lending environment turning away too many qualified borrowers? Could the housing market be in much better shape if we approved more home loans?
The National Association of Realtors (NAR) thinks so, and they announced as much during their 2010 conference this week. Obviously, Realtors depend on home sales to support their incomes, and easier credit requirements mean more buyers which equals more home sales.
But while it may be easy to just write off the NAR’s announcement as one trade group trying to rev up more business, or that this may be a signal that mortgage lending is beginning to relax way too soon, allow me to point out that I’ve heard this same point from mortgage lenders as well.
Mortgage rates are already at rock bottom. HSH.com’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the average rate for 30-year fixed-rate mortgages eased by three basis points (.03%), ending HSH.com’s national survey at 4.61%. Important for first-time homebuyers and low-equity-stake refinances, FHA-backed loans are available at an average rate of 4.26%, while the overall average rate for hybrid 5/1 ARMs was 3.51% for the period. HSH.com’s public data series include rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public.
The open question is, will mortgage borrowers benefit, and if so, by how much?
November 5, 2010 — After preparing the markets for the last several months, the Fed pulled the trigger [last] week on its latest plan to boost the economy. “Quantitative Easing II” or QE2, as it’s being called, will see the Fed purchase $600 billion in new Treasury bonds by the end of the second quarter of 2011 — and this in addition to the expected $250 to $300 billion it will also reinvest from the maturing mortgage portfolio it holds from the last monetary stimulus program.