JP Morgan Mortgage Report

Share |

JPMorgan Chase reported $4.4 billion in net income in the third quarter of 2010, or $1.01 per share, but expects mortgage delinquencies and losses to remain at high levels over the next several quarters.

Net income for the bank increased 23% from the $3.6 billion earned in the third quarter of 2009, but was down 6.7% from $4.7 billion in the previous quarter.

JPMorgan Chase originated $40.9 billion in mortgage loans, up 10% from a year ago and a 27% increase from the previous quarter. Its third-party mortgage servicing portfolio reached $1 trillion, declining 8% from a year ago and 4% from the previous quarter.

The bank earned $207 million from its mortgage banking sector, a 50% decrease from the third quarter of 2009.

Jaime Dimon, CEO of JPMorgan Chase, said losses from its mortgage division will not see much improvement in the months ahead and could even worsen.

"Our mortgage delinquency trends remained relatively flat compared with the prior quarter, and we expect mortgage credit losses to remain at these high levels for the next several quarters," Dimon said. "If economic conditions worsen, mortgage credit losses could trend higher."

source : housingwire

AP : Mortgage Rates Fell to The Lowest Level

Share |

NEW YORK — Rates on 30-year mortgages fell to the lowest level in decades for the ninth time in 12 weeks, pushed down by traders anticipating a move by the Federal Reserve to pump more money into the economy.

The average rate for 30-year fixed loans dropped to 4.27 percent, mortgage buyer Freddie Mac said Thursday. That’s the lowest on records dating back to 1971, and down from 4.32 percent the previous week.

The average rate on 15-year fixed loans, a popular choice for refinancing, dropped to 3.72 percent from 3.75 percent. That was lowest on records dating back to 1991.

Rates have mostly fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The 30-year rate was 5.08 percent at the beginning of April, while the 15-year rate was 4.39 percent.

In recent weeks, Treasury yields have dropped as investors predict that the Federal Reserve will soon increase its Treasury purchases to help boost the economy. That has pushed down rates.

The yield on the closely watched 10-year bond reached its lowest point this year at 2.39 percent Wednesday following a surprisingly weak employment report.

However, historically low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade.

Applications for mortgages to buy homes rose last week to the highest level since May, according to the Mortgage Bankers Association on Wednesday. However, that level is almost 32 percent below the level at the end of April, when homebuyer tax credits expired.

Also, much of the most recent surge was led by borrowers seeking a government loan before the requirements were tightened. The new standards, including higher credit scores and down payments, went into effect this week.

Sales this fall are not expected to improve that much. Job concerns have kept many people from buying homes. Tighter credit standards have also dissuaded many would-be buyers from purchasing. Experts also expect the worst-hit cities to face more foreclosures and other distressed sales.

To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.47 percent, down from 3.52 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.40 percent from 3.48 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.8 a point for 30-year mortgages. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.

By Janna Herron, AP Business Writer

Share |

WASHINGTON (AP) - Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday's report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.

"The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications," said Mark Zandi, chief economist at Moody's Analytics.

Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market.

Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That's about 48 percent of the those who had enrolled since March 2009. And it is up from more than 40 percent through June.

Another 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time.

RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 percent from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says.

Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac.

Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That's a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales - when lenders let homeowners sell for less than they owe on their mortgages.

Zandi predicts another 1.5 million foreclosures or short sales in 2011.

"We still have a lot more foreclosures to come and further home price declines," Zandi said. He said home prices, which have already fallen 30 percent since the peak of the housing boom, would drop by another 5 percent by next spring.

Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry said borrowers weren't sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers' monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500.

Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer.

The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures.

source : cbsnews

Save Money By Refinancing Home Loan in Australia

Share |

by Julia Clarke

The majority of Australians refinancing their home loans will see their interest rates drop upon doing so, a recent Mortgage Choice survey has found. The Mortgage Choice 2010 Refinancers Survey, conducted by Australian mortgage broker Mortgage Choice, found that 68 percent of home loan refinanciers saw their interest rates drop. Of this percentage, 23 percent were now saving more than $300 per month while 88 percent were saving more than $50 per month. The survey also found that the main motivation for refinancing was to switch to a ‘cheaper’ loan, with 24 percent of respondents using this reason, followed by the need to consolidate debts, prompting 11 percent to refinance.

Given the current economic climate, it is no surprise that so many Australians are refinancing their home loans, say Mortgage Choice spokesperson Kristy Sheppard.

“Contributing any extra savings into a loan each month can have a big impact in the long run. Based on a loan of $300,000 at 7 percent over 30 years, if a borrower rounded the monthly repayments of $1,996 up to $2,050, the loan would be repaid approximately one year and eight months earlier, saving over $25,000 in interest,” Ms Sheppard explained.

The survey also revealed that almost half of the refinancers did not pay exit fees. However, 22 percent paid up to $500, 16 percent between $500 and $1,000, 11 percent between $1,000 and $5,000, and 5 percent incurred over $5,000.

The survey shows that exit fees play an important role in when and how Australians decided to refinance their home loans, says Ms Sheppard.

“It is interesting to hear that after respondents researched their options, 26 percent delayed the refinance due to charges they would have incurred by doing so earlier. They weighed up the cost versus benefit of refinancing, which is what any savvy borrower would do before committing to a large financial decision,” said Ms Sheppard.

New Mortgage Low Rates

Share |

NEW YORK – Mortgage rates are the most affordable in decades for those who can qualify for a loan.

For many, the opportunity to buy a home or refinance at this time is lost because of the tough economy and tight credit standards. But those who have secure jobs, superior credit and strong finances could do even better than the 4.54 average rate that Freddie Mac reported Thursday, according to experts.

The latest rate is the lowest for a 30-year fixed loan since Freddie began tracking rates in 1971. It also marks the fifth time in six weeks that the mortgage company has reported hitting a new average low.

Still, it's possible to get an even lower rate if a borrower contributes more than 20 percent to the downpayment or has impeccable credit.

"Scores matter," said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla. He can offer a rate of 3.375 percent on a $200,000 Freddie Mac loan. The caveat: The borrower must put down 20 percent, have a credit score of 800 and pay $1,400 in add-on fees.

Susquehanna Bank, which has branches in Pennsylvania, New Jersey, Maryland and West Virginia, is advertising a similar loan. But the credit score requirement is 720 and the add-on fees total $750.

Sometimes the best rates are offered by community banks or credit unions. They keep mortgages on their books instead of selling them to investors, said Greg McBride, a senior financial analyst at Bankrate.com. Other times, bigger banks or smaller mortgage bankers have the best deals.

Keep in mind that rates fluctuate significantly, even within a day, like airfares on a travel site. And the key to finding the best rate is to shop around online and in person.

Either way, borrowers are getting good deals. The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.

The rate on 15-year fixed loans, a popular choice for refinancing, also are the lowest on records dating back to 1991. That rate fell to 4 percent from 4.03 percent last week.

Mortgage rates have been falling since spring. Yields on U.S. Treasury bonds have dropped as jittery investors seek safer investments. Rates tend to track the yields on Treasurys.

Low rates helped spark a little activity in the weak housing market. Applications to purchase homes rose 2 percent last week from the previous week, the Mortgage Bankers Association said Wednesday. Still, the housing market has been struggling and overall applications for loans were down last week as fewer people applied to refinance.

High unemployment, slow job growth and tight credit have made it difficult for many to purchase homes. Home sales got a boost this spring when the government offered homebuying tax credits, but activity has fizzled since those expired in April.

Sales of previously occupied homes fell 5.1 percent in June. New home sales jumped last month, but it was the second-weakest month on record and it came after sales tumbled in May.

Refinance activity has increased over the last month as homeowners seek more affordable monthly payments. But many don't qualify for a loan or don't have the cash to pay for closing costs. And rates have been low for so long that many have already refinanced.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country.

Rates on five-year adjustable-rate mortgages averaged 3.76 percent, down from 3.79 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.64 percent from 3.70 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for all loans.

source : AP

Why Refinance Important

Share |

Making decision to refinance is important.

Advantages and Disadvantages of Refinancing

• The single most obvious benefit to refinancing a home is that a refinancing package can free you from a high mortgage rate. Too often, individuals outgrow their original loans as a result of their changing financial needs and habits. Refinancing offers individuals the opportunity of updating their loan in order to accommodate to their new needs like children, income increase or decrease, and even college tuition
• Another serious advantage to a refinancing package is that many programs allow homeowners access to the equity that they have spent so much time establishing in their homes. Many homeowners need this cash in order to finance college education, begin a small business, consolidate debt, or to make any other large investment.
• One major disadvantage to refinancing one’s current home loan is that individuals must pay close attention to what they are going to spend over the life of the new loan compared to what they would have spent over the course of the original loan. The refinancing program should not ultimately cost the homeowner more than they would have paid with their original loan.
• Another disadvantage to refinancing is that homeowners must exercise a substantial amount of restraint and caution with regard to the equity that they have just been given and the amount of cash that has been liberated from their monthly expenses. Too often individuals hastily spend this money when it should be directed toward a long-term investment.

Mortgage basics

Share |

The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Two income-to-debt ratios established by Fannie Mae are standard requirements for conventional mortgages. The first requirement is that monthly mortgage principal and interest payments (P&I), plus insurance and property taxes, cannot exceed 28% of the buyer's gross monthly income (some exceptions may apply to increase this limit to 33%).

The second requirement limits total monthly debt payments (housing, credit cards, car payments, etc.) to 36% of gross monthly income. In addition to these requirements, you may have to pay 10% to 20% down on the total purchase price to qualify for a conventional mortgage.

Mortgage Rates and Minimum Incomes Needed to Qualify
Interest Rate	Monthly Payment	Minimum Annual Income
4%	$454	$21,770
5%	$510	$24,479
6%	$570	$27,340
7%	$632	$30,338
8%	$697	$33,460
9%	$764	$36,691
10%	$834	$40,017
11%	$905	$43,426
12%	$977	$46,905
Mortgage companies use ratios to analyze your mortgage payment. The above example shows the monthly payments of principal and interest, and income needed to qualify for a $95,000 mortgage at various interest rates, amortized on a 30-year schedule, assuming a payment ratio of 25%. Source: National Association of Home Builders, Economics Division.