Decline in Mortgage Default Rates drive a drop in the Composite Default Index

Decline in Mortgage Default Rates drive a drop in the Composite Default Index

nyse127The national composite default index dropped by seven basis points from February to March, its first month-over-month decline in eight months, led by declines in both mortgage default indices, according to S&P Dow Jones Indices and S&P/Experian Consumer Credit Default Indices for March 2015 released Tuesday.

The mix of recent economic data suggests the economy is growing, but more slowly than at the end of 2014.

Moreover, the signs of moderation – retail sales and March’s slower increase in payrolls – suggest that the Fed isn’t likely to raise interest rates until later in 2015 or 2016.

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ARE WE ON THE RIGHT TRACK?

ARE WE ON THE RIGHT TRACK?

foreclosure-montageEight national banks,  Bank of America, JPMorgan Chase, Citibank, HSBC, OneWest Bank, PNC, U.S. Bank, and Wells Fargo  saw the performance of their first-lien mortgages improved in the fourth quarter of 2014, while the delinquency rate on those mortgages and the foreclosure activity continued to decline, according to a quarterly report on mortgage performance by the Office of the Comptroller of the Currency (OCC) released Friday.

The mortgages covered in the report comprised about 45 percent of all outstanding residential mortgages in the United States – about 23.1 million mortgages with principal balances totaling about $3.9 trillion as of December 31, 2014.

Foreclosure inventory dropped by 39.7 percent year-over-year in Q4 down to 315,022, and Home retention actions, which included modifications, trial period plans, and shorter-term payment plans, totaled 195,577 in Q4, a decline of 19.5 percent year over year.

What do you think…

Existing home sales slightly rebound

Existing home sales slightly rebound

Why this is a great time to sell your home?

 This is a great time to sell your home!

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.2% to a seasonally adjusted annual rate of 4.88 million in February from 4.82 million in January. Sales are 4.7% higher than a year ago and above year-over-year totals for the fifth consecutive month.

1.2 Million Borrowers Nationwide Regained Equity in 2014

1.2 Million Borrowers Nationwide Regained Equity in 2014

 

On today’s new analysis released by CoreLogic, leading global property information, analytics and data Price-Income_Featured-f084f5services provider, reported that 1.2 million borrowers regained equity in 2014. Nationwide, borrower equity increased year over year by $656 billion in Q4 2014. Borrowers with near negative equity are considered at risk of moving into negative equity if home prices fall. In contrast, if home prices rose by as little as 5 percent, an additional 1 million homeowners now in negative equity would regain equity. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling, and only data for mortgages residential properties that have a current estimated value is included.

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PORQUE LOS PRESTATARIOS PAGAN SEGURO PRIVADO DE HIPOTECA?

PORQUE LOS PRESTATARIOS PAGAN SEGURO PRIVADO DE HIPOTECA?

Debido al riesgo en el incumplimiento y pérdida del préstamo. Los Bancos requieren el seguro de hipoteca privado conocido como PMI en PMI copyhipotecas cuyos compradores traen menos del 20% del precio de compra. Si los prestamistas pagaran seguro de hipoteca y pasaran el costo a los prestatarios reflejando un tipo de interés más alto, pudiendo esperar que los intereses incrementen drásticamente. Si el prestatario paga PMI estaría evitando este riesgo potencial.

Generalmente, cuanto más grande es la cantidad del préstamo, más riesgo adquiere el prestamista. El seguro de hipoteca privado es protección para el prestamista contra un prestatario que incumple en su préstamo hipotecario. Si el prestatario no pudiera pagar el préstamo, el prestamista tiene una manera de conseguir su dinero de regreso a través de la aseguranza privada al préstamo o PMI. Infórmate para que tus decisiones sean las mas acertadas al momento de invertir en la compra de tu casa.

Foreclosure Beware!

Foreclosure Beware!

We are experiencing one of the biggest foreclosure filling increases for the last four years.

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The number of foreclosure filings experienced a big jump from September to October alone. These filings include but not limited to notice of defaults, scheduled auctions, and bank repossession.  According to RealtyTrac this is the largest month-over-month jump since the peak of foreclosure activity in March 2010.

However even though Foreclosure filings reported were into a considerable 123,109 U.S. residential properties in October,  fortunately still represented an 8 percent decline overall in the number of foreclosure filings from October 2013.  This is equivalent to one house for every 1,069 residential properties in the U.S. reported a foreclosure filing in October based on the latest report from RealtyTrac.

These numbers did not take us by surprise due to that over the past three years an average of 8 percent monthly uptick was scheduled for foreclosure procedures in the country.

On the other hand, REO activity (lenders repossessing properties via foreclosure) increased by 22 percent from September. The largest month-over-month increase since June 2009.  Overall, lenders repossessed 27,914 U.S. residential properties in October, as reported by RealtyTrac which is an agency that monitor housing foreclosure activities in the country.

Homeownership at Best!

Homeownership at Best!

Federal Housing Finance Agency has been working towards a plan to open what many we see as underwriting standards that are too restrictive.

Mortgage giants Fannie Mae and Freddie Mac, their regulator and lenders are close to an agreement that could greatly expand mortgage credit while helping lenders protect themselves from charges of making bad loans, according to people familiar with the matter.

Homeownership getting better!

Homeownership Gets Better!

If the agreement is completed, lenders may be more willing to lend to borrowers with lower credit scores and smaller down payments.

Now that lenders are starting to remove some of the credit overlays, it is time to improve the growth of homeownership in the country

We expect FHFA to report the steps to further move and clarify lender liability and support the return of the 97% LTV product at the GSEs, Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac have recouped tens of billions of dollars in penalties from lenders in recent years over claims that the lenders made underwriting mistakes on loans they sold to the mortgage giants.

However, Lenders have blamed those penalties for tight credit conditions and for prompting them to make loans only to borrowers with near-pristine credit.

We hope these initiatives will have a meaningful impact on the mortgage market, and we can see positive changes in the direction of the mortgages industry after years of tightening credit issues.

Next Tuesday will see the existing home sales report for September, on Thursday the FHFA purchase-only house price index for August, and Friday the new home sales report.

 

Fannie Mae sets new rates effective October 14

Fannie Mae sets new rates effective October 14

Fannie Mae is set to raise the benchmark interest rate for its Standard Modification program. Fannie Mae will raise its required interest rate for standard modifications from 4.375% to 4.5%.  The rate was lowered from 4.5% to 4.375% on Sept. 15, but will now rise again in one week. Fannie Mae announced the change on Tuesday in an email sent to its servicers.

When the program began in Jan. 2012, Fannie’s benchmark interest rate was 4.625%. Fannie lowered the interest rate to 4.25% in Sept. 2012, before dropping it to 4% on Dec. 1, 2012.

“Fannie Mae Standard Modification interest rate is not determined on a preset schedule,” Fannie said in the note to its servicers. “The interest rate is subject to periodic adjustments based on an evaluation of prevailing market conditions.”

Fannie also noted that any loan modification requests that were approved at the previous rate are not eligible to be resubmitted for approval under the new modification rule

Homeowners Pay Less for  Mortgage than Renters for Rent

Homeowners Pay Less for Mortgage than Renters for Rent

Paying a mortgage is cheaper than paying rent. But owning a home costs more.  The never ending debate…Is better to buy or rent?  This could be answered only after considering all of the expenses that contribute to homeownership.

The Bureau of Labor Statistics (BLS) says it’s cheaper to own. It has become less expensive to own. From 2009 to 2012, fueled by falling interest rates, ForRentForSalehomeownership has become more affordable, while renters saw costs go in the opposite direction, according to the BLS.

A recent report by Zillow found that current U.S. home buyers can expect to pay 15.3% of their incomes to a mortgage on the typical home – down considerably from the 22.1% of income homeowners had to budget in the pre-bubble years but renters pay today over 29.5% of their income to rent, compared to 24.9% in the pre-bubble period.

The main reason for the budget disparity is the income gap between owners and renters. At the end of the second quarter, the Census Bureau reported the median annual income in the U.S. was $53,216. But among homeowners, median salaries were $65,514 per year, while the typical renter’s income was just $31,888.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Congress is now back from its summer vacation, so the burning financial question on thousands of homeowners’ minds right now is this: Are you finally going to help the consumers who are underwater on their mortgages and have already accepted a principal reduction by their lenders? 20131125_fact copy

Under current federal tax law, when the homeowners accept reductions in what they owe, the amount forgiven by the bank gets reported to the IRS, and the owner is hit with taxes as if it were ordinary income.

The Mortgage Forgiveness Debt Relief Act of 2007 was created to help distressed homeowners; that were faced with taxes after a Principal reduction; however this law has already expired Dec. 31, 2013.

If Congress does not extend the law retroactively thousands of underwater homeowners could be hit with tax burdens they may not be able to handle. We hope for the Best!