Entries from May 2006 ↓

Freddie Mac, the 2nd largest mortgage lending company, has just announced they will be offering new mortgage products through the world wide web this summer. The programs include Home Possible, a program that is designed for borrowers who need assistance, and over 20 other mortgage programs.

The company’s Loan Prospector automated underwriting service and its online selling system will include a new array of 40-year mortgages, 20 more adjustable-rate mortgage (ARM) products and federally insured rural housing mortgage products, the company said.

It is also expanding its flagship suite of affordable mortgage products, known as Home Possible, by adding a special 40-year fixed-rate option and providing lenders with more competitive selling options.

The enhancements, to be rolled out this summer, were announced at the Mortgage Bankers Association’s National Secondary Conference and Expo in Chicago.

Bank of America analysts raised their ratings for Fannie Mae and Freddie Mac as the largest mortgage finance companies settled their investor class action lawsuit. The mortgage lenders have been under a cloud since irregularities showed up on the balance sheets of the two concerns.

The bank changed its rating of Freddie Mac to “buy” from “neutral” and its recommendation on Fannie Mae to “neutral” from “sell.” In both cases it raised its estimate of how high the companies’ share prices can go, the bank said in separate reports today.

Freddie Mac’s so-called target price was raised to $70 from $68.75 in part because of better long-term profitability, Bank of America said. The bank raised Fannie Mae’s to $50 per share from $48, it said. via Bloomberg

New York Mortgage reported 1st quarter earnings and showed a loss of 14 cents a share. They attributed this to a difficult lending environment but they see a 30 percent increase in lending in the second quarter so far. This could be a very good indicator of the market as a whole as the marketplace stopped with the fear of a bubble but now pressures from housing demands may be re-invigorating the housing and mortgage market.

“While we were disappointed with our first quarter financial results, they were not unexpected given the challenges that persist in the mortgage industry at present. Fortunately though, as a result of the repositioning of our REIT portfolio during the first three months of 2006, we have been able to improve our REIT earnings potential and stabilize our quarterly dividend at $0.14 for 2006. Though our loan origination volume in our mortgage banking subsidiary fell approximately 9.9% in the first quarter of 2006 as compared to the first quarter of 2005, the decrease we experienced compares favorably to the overall industry decline of 20.3% predicted by the Mortgage Bankers Association for the comparable period. Additionally, during the last 60 days we have experienced an approximate 30% increase in loan origination volumes over our January and February volumes and expect that this favorable trend will enable us to show significant improvements in our TRS earnings in future quarters with a targeted breakeven in the TRS by the third quarter of this year,” Steven B. Schnall, Chairman, President and Co-Chief Executive Officer, commented.

MSN Money - PR Newswire Business News: New York Mortgage Trust Reports First Quarter 2006 Results.

Cash out refinancing has risen in the  first quarter of 2006 as refinancing for improved interest rates slowed to a crawl. People are  now looking on extracting some of the appreciation out of their  homes instead of trying to get a lower rate. Freddie Mac has come out with the new report on the trend.

In the first quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances, according to Freddie Mac’s quarterly refinance review. This percentage is up from the fourth quarter of 2005, when the share of refinanced loans that took cash out was a revised 81 percent, and is the highest since the third quarter of 1990.
“The share of all mortgages that were for refinance fell slightly in the first quarter of 2006 to 44 percent from 45 percent in the fourth quarter of 2005. Over that same period interest rates on all mortgages increased between 0.02 and 0.25 percent,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Almost no one is refinancing to reduce their interest rate in today’s environment. In fact, the first quarter of 2006 is the first time in 20 quarters in which the new mortgage rate was higher than the old one for more than half of refinancing borrowers. One reason why homeowners may be willing to increase the mortgage rate on their first-lien mortgage is because interest rates on most home equity lines of credit have been pushed up again as the Fed increased short-term interest rates in January and March, which in turn pushed up the prime rate. Home-equity loans are typically linked to the prime rate, which currently is at 7.75 percent, and many home equity loans have rates that are one percent or more above the prime rate. In contrast, the average rate on 30-year fixed-rate mortgages is presently near 6.5 percent. via Freddie Mac News Archive

Ameriquest, one of the largest mortgage lenders in the subprime market, is shutting down 229 branch offices and laying off 3,800 employees in  a drastic restructuring. The layoffs compose a third of the workforce and is designed to allow the company to remain competitive is a slowing mortgage environment.

Ameriquest is the nation’s largest subprime mortgage lender. It said it was centralizing its network of branches into offices in California, Arizona, Illinois and Connecticut but would continue to offer lending services nationwide.

It said the changes would not affect its ability to adhere to the terms of a $325 million multistate settlement reached this year with state attorneys general over claims of deceptive lending practices. via Chicago Tribune.

Federal Reserve Chairman Ben Bernanke has announced that the Fed’s persistant attack on inflation over the past two years may be nearing an end. He signaled that 1 more interest rate hike and then the Fed will take a break. Of course, he was not that blunt, but this was how his appearance at the Congress Joint Economic Committee was interpreted by experts.

How this will effect mortgage rates is to be seen, but for those who are invested in Adjustable Rate Mortgages may see a reprieve from the onslaught of increases they have seen the past couple of years.

 

Keeping his options open, Federal Reserve Chairman Ben Bernanke signaled Thursday that after one more interest rate increase the central bank may take a break - perhaps only temporarily - from a rate-raising campaign aimed at keeping inflation at bay.
In his most extensive comments yet on the possible path of monetary policy, Bernanke also suggested that interest rate decisions could become less predictable than they have been as Fed policymakers rely more heavily on barometers of economic activity and inflation.
The Federal Reserve, which has raised rates 15 times at policy meetings over the past two years, “may decide to take no action at one or more meetings” in the future while waiting for economic information, Bernanke told Congress’ Joint Economic Committee.
“Of course, a decision to take no action at a particular meeting does not preclude actions at subsequent meetings,” he added. via The Modesto Bee.