Freddie Mac Rolls Out Two New Mortgages for Multi Family

Freddie Mac brings out two new mortgage products.

1. Acquisition Rehabilitation Mortgage: The total repair cost must be a minimum of $10,000 per unit but must not exceed the lesser of $30,000 per unit or 30 percent of acquisition cost. NOTE: This would allow an new buyer to completely rehab a property and reposition for a different target market. Perhaps a neighborhood in transition would be a prime reason to look into this option.

2. Acquisition Upgrade Mortgage: The total repair cost must be a minimum of $3,000 per unit but must not exceed the lesser of $10,000 per unit or 20 percent of acquisition cost. This product offers borrowers financing of up to 86 percent loan-to-purchase and 80 percent loan-to-cost. NOTE: This mortgage is designed for unit upgrades such as appliances or new bath remodels.

These new products can be obtained at the same time maximizing mony available for a big rehab with guaranteed rate lock-ins. More on the Freddie Mac page

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Freddie Mac Mortgage Update

Mortgage Rates Reverse Trend And Rise This Week
Housing Industry Still Struggling


McLean, VA Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.11 percent with an average 0.5 point for the week ending December 13, 2007, up from last week when it averaged 5.96 percent as well. Last year at this time, the 30-year FRM averaged 6.12 percent.

The 15-year FRM this week averaged 5.78 percent with an average 0.5 point, up from last week when it averaged 5.65 percent. A year ago at this time, the 15-year FRM averaged 5.86 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, with an average 0.6 point, up from last week when it averaged 5.75 percent. A year ago, the 5-year ARM averaged 5.92 percent.

One-year Treasury-indexed ARMs averaged 5.50 percent this week with an average 0.6 point, up from last week when it was 5.46 percent. At this time last year, the 1-year ARM averaged 5.45 percent.

Direct from the Freddie Mac Site.

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Finally, Some Good News in the Sub Prime Markets

The Wall Street Journal writes of a discussion with Rosengren, the Boston Fed governor, who indicated that many of the sub prime holders had the ability to refi through the FHA. He goes on to note that 55% of the sub prime holders never missed a payment and had some euqity in their homes with reasonable FICO scores and were therefore good candidates for a FHA refi. The article goes on to say that amounts to 1.2 million loans that can be refinanced to lower risk.

What is amazing to me is that the average interest rate on a fixed rate two year loan was 8%. I looked on the net for a comprehensive directory of banks that provide FHA insured loans and couldnt find a single source. This makes it very hard to alert people to the possibilitiy of reducing risk or getting a more suited mortgage for their home. The HUD www.hud.gov/offices/hsg/sfh/insured.cfm site offers some help, but didnt make it easy for consumers to find a bank.
If anyone has any information on DHA refinancing opportunities please share here

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Howard Bell
www.yourpropertypath.com

Foreclosures on the Rise: A Deal in the Making

The Wall Street Journal reports that are up 94% since last year and now may be leveling off. Whats interesting according to the article is that the default rate is down 9% from last year. Its pure speculation as to why, but realtytrak CEO james Saccacio thinks that some of the programs put in place to help homeowners amy be beginning to make a mark.

Is Bush Cutting a Deal

Whats very hopeful to me is that according to MSN, the Bush Administration and some of the big banks are coming close to a deal that will help keep homeowners in their homes and supply off the market.

How?

By having the major banks agree to keep those low teaser rates in place for a few more years. The banks just might go for this because some cash flow is better than none if homes move to foreclosure or default.

"An estimated 2 million of those initial low, teaser rates are scheduled to reset to much higher levels by the end of next year, pushing the payment on a typical mortgage from $1,200 per month to $1,550, an increase of $350. The concern is that many homeowners will not be able to meet the higher payments, triggering hundreds of thousands of defaults." From MSN.com

This is a good market solution that wont require the Govt to bail out homeowners and the lenders take responsibility by keeping loans rates low , buying enough time to keep them in their homes. lets hope this goes through. The Treasury Secretary speaks before the national Housing Conference on Monday. Stay Tuned...

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Howard bell
www.yourpropertypath.com

Housing Recession: Is It Over Yet

According to Donald Kohn, a top Fed official, the Fed will give serious attention to cutting rates again at the Dec 11 meeting. As of this date we have seen a 3/4 of a point drop in rates and still inventory is increasing and the foreclosure rates are going through the roof. No doubt, only to get worse because we have so many ARM's beginning to reset.

His remarks sent the stock market up over 300 points on the possibility of a rate cut to keep the economy from slowing down, seems the credit tightening is now slowing economic activity. Generally, rate cuts take 6-9 months to better economic activity.

NAR's LAwrence Yun doesnt predict any major who said low mortgage rates and job growth should keep sales from falling. Personally, I think we have quite a ways to go. It takes a long time for peoples perception to change and as of now that perception is to wait for more price decline and possibly lower rates. Not yet stabilized in my opinion.

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Mortgage Rates and Market Opportunity

Freddie Mac Weekly Updates

The 30-year fixed-rate mortgage (FRM) averaged 6.24 percent unchanged from last week when it averaged 6.24 percent as well. Last year at this time, the 30-year FRM averaged 6.24 percent. Note: The 30 year rate has not changed since last year.

The 15-year FRM this week averaged 5.88 percent . A year ago, the 15-year FRM averaged 5.94 percent. Note: The shorter term 15 year rate is lower by 6 basis points year over year.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.96 percent this week. A year ago, the 5-year ARM averaged 6.04 percent. Note: The short term variable rate is lower 8 basis points year over year.

The Take-Away

The Fed rate reductions are hardly impacting mortgage rates which means to me that they are not interested in bailing our the homeowner. If we cant count on the Fed to stimulate sales and keep homeowners in their homes then where is the market opportunity.

Market Opportunity

1. Rental Property: The apartment sector is doing well because when people are not buying they will rent. This is soaking up rental supply and boosting cash flow and property value.

2. Foreign Buyers: The dollar keeps dropping relative to other currencies. When interest rates drop, other currencies "pay better" than the dollar. I think that if you are an investor or agent in areas that are of investment interest to foreigners, then there may be opportunity in marketing to investors who see our property as inexpensive vs. their own currency.

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Howard Bell
www.yourpropertypath.com

Is the Fed Really Helping Homeowners

Chairman Ben S. Bernanke speaks before the Joint Economic Committee, U.S. Congress on the economic outlook on November 8, 2007

Developments in Financial Markets

Chair of the Federal Reserve system spoke before Congress on Nov 8 to report on the state of the economy. I read the report and Here is a summary of what I got out of it.
1. Financial turmoil was triggered by investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates.
2. Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage subprime loans experience their first interest rate resets.

Federal Reserve Policy Actions
1. August 17, the Federal Reserve Board cut the discount rate ( read short term rates, mortgages are long term rates) the rate at which it lends directly to banks--50 basis points, or 1/2 percentage point, and subsequently took several additional measures.
2. These efforts to provide liquidity appear to have been helpful on the whole, but the functioning of a number of important markets remained impaired.

The Risks
1. Financial market conditions would fail to improve or even worsen, causing credit conditions to become even more restrictive than expected
3. House prices might weaken more than expected, which could further reduce consumers' willingness to spend and increase investors' concerns about mortgage credit.
4. Financial market volatility and strains have persisted.
5. Sharp increases in crude oil prices have put renewed upward pressure on inflation and may impose further restraint on economic activity.

KEY: The FOMC will continue to carefully assess the implications for the outlook of the incoming economic data and financial market developments and will act as needed to foster price stability and sustainable economic growth. Note: Sounds like another cut in interest rates to me. But whats the impact? Where is the homeowners in this reduction. We know that credit card owners and home equity loans are the kind of debts that respond to short term reductions, but where is the help for the homeowner?

KEY: From Freddie Mac - the 30-year fixed-rate mortgage (FRM) averaged 6.24 percent, Last year at this time, the 30-year FRM averaged 6.33 percent. The 15-year FRM this week averaged 5.90 percent, A year ago, the 15-year FRM averaged 6.04 percent. Now, I have read that the variable mortgages will be readjusting for 3-5 years and that the average households annual mortgage increase will be $10,000. The long term rates are hardly affected by the .75% decrease already provided by the Fed. The total decline in rates from last year to this is not enough help. Can the Fed possibly think that .09% on the 30 year and .14% decrease on the 15 year mortgage rates will be enough to keep people in their homes and supply off the market? Im afraid as far as price and supply there is much more bad news to come, unless Congress steps up and significantly helps the home owner.

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