Mortgage Rates continue to drop.
These Rates are from local Myrtle Beach banks
CONVENTIONAL 30 YEAR FIXED 4.750%
FHA/VA FIXED 4.875%
Wednesday, December 17, 2008
Tuesday, December 16, 2008
Federal Reserve announced Tuesday
The Federal Reserve announced Tuesday that it has cut the target for its key federal funds rate to a range of 0 to 0.25 percent, down from 1 percent set back in October.
The federal funds rate is the interest rate banks charge each other. The new target range puts the rate at its lowest level on record.
In the Fed's policy statement, Chairman Bernanke said the committee will use all available tools in order to contain the financial crisis.
The statement also said "weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."
The outlook for economic activity has weakened further since the Fed's last meeting. Labor markets, consumer spending and business investment all showed declining trends, according to the Fed.
Going forward the Fed will focus on supporting the function of financial markets and aim to stimulate the economy through open market operations.
The Fed said it will continue to purchase large amounts or agency debt and mortgage-backed securities.
The committee also approved a 75 basis point cut in the discount rate to .50 percent.
All changes made by the Fed committee on Tuesday were unanimously approved by the 12 Fed governors.
U.S. markets moved higher on the announcement while yields on 10 year and 30 year Treasury bonds fell.
The federal funds rate is the interest rate banks charge each other. The new target range puts the rate at its lowest level on record.
In the Fed's policy statement, Chairman Bernanke said the committee will use all available tools in order to contain the financial crisis.
The statement also said "weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."
The outlook for economic activity has weakened further since the Fed's last meeting. Labor markets, consumer spending and business investment all showed declining trends, according to the Fed.
Going forward the Fed will focus on supporting the function of financial markets and aim to stimulate the economy through open market operations.
The Fed said it will continue to purchase large amounts or agency debt and mortgage-backed securities.
The committee also approved a 75 basis point cut in the discount rate to .50 percent.
All changes made by the Fed committee on Tuesday were unanimously approved by the 12 Fed governors.
U.S. markets moved higher on the announcement while yields on 10 year and 30 year Treasury bonds fell.
Sunday, December 14, 2008
4.5% mortgage rates
Reporting from Washington -- Could a 4.5% mortgage be your personal piece of the bailout pie?
Apparently many consumers thought precisely that the week after hearing that the Treasury Department was working on plans to slash loan rates for consumers who buy houses in the coming months.
The news threw a wrench into the marketplace -- making some shoppers reluctant to commit to purchase without guaranteed access to 4.5% mortgage money. In some cases, it stalled deals that were ready to go.
"It put us into limbo," said Dennis Badagliacco, chief executive of Altera Real Estate, a brokerage firm in San Jose. "Once [news] leaked out, it immediately slowed down" the pace of sales contracts and discussions, he said -- an ironic side effect of a plan ultimately meant to stimulate real estate transactions.
Customers didn't want to gamble that they'd be locked into a 5.5% mortgage when 4.5% financing might be readily available if they simply waited a week or two, Badagliacco said.
Another irony of the situation: The National Assn. of Realtors, of which Badagliacco is a director, was the primary force behind the concept of federal intervention to lower rates by a full percentage point. Representatives of the association brought the proposal to federal officials as part of a multipoint plan to kick-start the economy through housing.
The Federal Reserve has already formally adopted one of the group's recommendations -- committing to buy $500 billion in mortgage securities to inject liquidity into a market burdened by investors' fears, and to buy $100 billion in debt issued by Fannie Mae and Freddie Mac. Those moves knocked 30-year mortgage rates down by half a percentage point within a day, from 6% to 5.5%.
But setting up a program in which the government would buy securities backed by loans originated by private lenders at 4.5% would take longer to implement.
So what do you do if you're already well along in your shopping, you've found a house at a great price and you're ready to apply for a mortgage at 5.5%, but don't want to miss out on potentially lower rates?
Ask your broker or loan officer whether you can lock in today's rate but still have the ability to move down should cheaper money become available. Not all lenders can accommodate such requests, but some brokers offer 60-day locks with that option. Others may charge you.
Either way, you're better prepared for your own little bailout -- just in case it comes your way -- without having to risk losing the house you really want.
Apparently many consumers thought precisely that the week after hearing that the Treasury Department was working on plans to slash loan rates for consumers who buy houses in the coming months.
The news threw a wrench into the marketplace -- making some shoppers reluctant to commit to purchase without guaranteed access to 4.5% mortgage money. In some cases, it stalled deals that were ready to go.
"It put us into limbo," said Dennis Badagliacco, chief executive of Altera Real Estate, a brokerage firm in San Jose. "Once [news] leaked out, it immediately slowed down" the pace of sales contracts and discussions, he said -- an ironic side effect of a plan ultimately meant to stimulate real estate transactions.
Customers didn't want to gamble that they'd be locked into a 5.5% mortgage when 4.5% financing might be readily available if they simply waited a week or two, Badagliacco said.
Another irony of the situation: The National Assn. of Realtors, of which Badagliacco is a director, was the primary force behind the concept of federal intervention to lower rates by a full percentage point. Representatives of the association brought the proposal to federal officials as part of a multipoint plan to kick-start the economy through housing.
The Federal Reserve has already formally adopted one of the group's recommendations -- committing to buy $500 billion in mortgage securities to inject liquidity into a market burdened by investors' fears, and to buy $100 billion in debt issued by Fannie Mae and Freddie Mac. Those moves knocked 30-year mortgage rates down by half a percentage point within a day, from 6% to 5.5%.
But setting up a program in which the government would buy securities backed by loans originated by private lenders at 4.5% would take longer to implement.
So what do you do if you're already well along in your shopping, you've found a house at a great price and you're ready to apply for a mortgage at 5.5%, but don't want to miss out on potentially lower rates?
Ask your broker or loan officer whether you can lock in today's rate but still have the ability to move down should cheaper money become available. Not all lenders can accommodate such requests, but some brokers offer 60-day locks with that option. Others may charge you.
Either way, you're better prepared for your own little bailout -- just in case it comes your way -- without having to risk losing the house you really want.
Loan modifications
a private investor in mortgage-backed securities, filed a lawsuit in New York State Supreme Court on December 1st alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal.
The lawsuit, which seeks class-action status, was filed against Bank of America, which bought Countrywide in late 2007. Frey argues that most of the Countrywide loans are not Countrywide's or Bank of America's to modify, but rather are owned by trusts that bought them through securitization.
In an article published by BusinessWeek.com, Frey claims that BofA’s modifications will short bondholders $8.4 billion by reducing borrower payments. While those loan adjustments may help to keep struggling borrowers in their homes today, Frey says those alterations run the risk of permanently damaging the secondary market for housing finance.
At the heart of the issue is how loans are packaged and securitized. Typically once a loan is originated it is packaged and sold off to investors. These securities are called Mortgage Backed Securities or MBSs. These MBSs are purchased by trusts put together by Wall Street bankers. When borrowers pay interest and principal on their mortgage loans, those payments go to the trusts, not to the lender that initially made the mortgage loans. To raise the money to buy or fund the loans, the trusts sell interests in a pool to investors or bondholders. Therefore, when banks modify the terms or principle amount of the loans held by the trusts it is the trust not the bank that takes the loss.
"I am an advocate for investors' contractual rights," says Frey, 50, in the interview. He has publicly argued since March that loan modifications are against contract law, and has threatened to sue banks -- despite, he says, receiving pressure to back down from Washington.
"Investors' voices have been muted in this debate because they speak of an inconvenient truth: Current solutions sacrifice the long-term viability of this nation's housing finance system for short-term political gain. No matter how noble the intent, it is not in the interest of the United States now, or in the future, to tell its citizens and the world at large that U.S. contract rights may be bent with the political winds," added Frey.
While so far Frey is the only member of the proposed class against BofA, Frey says he's on a crusade on behalf of all large investors who bought Triple A-rated mortgage bonds, and not just those who bought bonds backed by Countrywide mortgages. The suit alleges that modifications favor bondholders who bought the riskiest pieces. Normally those investors should suffer losses first, but that's not what's happening in the current wave of workouts, according to the suit.
In another published report, BofA spokeswoman Shirley Norton says: "We have not yet received a filing and, therefore, we cannot comment on specific claims. We are, however, disappointed in this attempt to halt a program intended to keep as many as 400,000 at-risk families in their homes and, together with similar programs across the industry, stabilize the nation's housing market. We are confident that together with the attorneys general we have built a program that benefits both consumers and investors, whose interests we carefully considered in developing our program."
Frey suggests that a solution would be for the government to buy all the troubled loans from mortgage-backed securities pools at a price tag of roughly another $500 billion. Under Frey’s plan bondholders would be made whole and the government -- that is taxpayers -- would then have their investment reduced when loans are modified.
If successful, the suit may put a halt to modification of loans without getting permission from the trusts who ultimately own the loans.
The lawsuit, which seeks class-action status, was filed against Bank of America, which bought Countrywide in late 2007. Frey argues that most of the Countrywide loans are not Countrywide's or Bank of America's to modify, but rather are owned by trusts that bought them through securitization.
In an article published by BusinessWeek.com, Frey claims that BofA’s modifications will short bondholders $8.4 billion by reducing borrower payments. While those loan adjustments may help to keep struggling borrowers in their homes today, Frey says those alterations run the risk of permanently damaging the secondary market for housing finance.
At the heart of the issue is how loans are packaged and securitized. Typically once a loan is originated it is packaged and sold off to investors. These securities are called Mortgage Backed Securities or MBSs. These MBSs are purchased by trusts put together by Wall Street bankers. When borrowers pay interest and principal on their mortgage loans, those payments go to the trusts, not to the lender that initially made the mortgage loans. To raise the money to buy or fund the loans, the trusts sell interests in a pool to investors or bondholders. Therefore, when banks modify the terms or principle amount of the loans held by the trusts it is the trust not the bank that takes the loss.
"I am an advocate for investors' contractual rights," says Frey, 50, in the interview. He has publicly argued since March that loan modifications are against contract law, and has threatened to sue banks -- despite, he says, receiving pressure to back down from Washington.
"Investors' voices have been muted in this debate because they speak of an inconvenient truth: Current solutions sacrifice the long-term viability of this nation's housing finance system for short-term political gain. No matter how noble the intent, it is not in the interest of the United States now, or in the future, to tell its citizens and the world at large that U.S. contract rights may be bent with the political winds," added Frey.
While so far Frey is the only member of the proposed class against BofA, Frey says he's on a crusade on behalf of all large investors who bought Triple A-rated mortgage bonds, and not just those who bought bonds backed by Countrywide mortgages. The suit alleges that modifications favor bondholders who bought the riskiest pieces. Normally those investors should suffer losses first, but that's not what's happening in the current wave of workouts, according to the suit.
In another published report, BofA spokeswoman Shirley Norton says: "We have not yet received a filing and, therefore, we cannot comment on specific claims. We are, however, disappointed in this attempt to halt a program intended to keep as many as 400,000 at-risk families in their homes and, together with similar programs across the industry, stabilize the nation's housing market. We are confident that together with the attorneys general we have built a program that benefits both consumers and investors, whose interests we carefully considered in developing our program."
Frey suggests that a solution would be for the government to buy all the troubled loans from mortgage-backed securities pools at a price tag of roughly another $500 billion. Under Frey’s plan bondholders would be made whole and the government -- that is taxpayers -- would then have their investment reduced when loans are modified.
If successful, the suit may put a halt to modification of loans without getting permission from the trusts who ultimately own the loans.
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