The U.S. Housing Bust Is Over

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via: The Wall Street Journal by David Wessel

The housing market has turned—at last.

The U.S. finally has moved beyond attention-grabbing predictions from housing "experts" that housing is bottoming. The numbers are now convincing.

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. "We finally saw some rising home prices," S&P's David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.

Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months' worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.

The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won't happen again this year, he says.

Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.

"Even with the overall economy slowing," Wells Fargo Securities economists said, cautiously, in a note to clients, "the budding recovery in the housing market appears to be gradually gaining momentum."

Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't. (The full results of the Journal's July survey will be released at 2pm ET)

Housing is still far from healthy despite the Federal Reserve's efforts to resuscitate it by helping to push mortgage rates to extraordinary lows: 3.62% for a 30-year loan, according to Freddie Mac's latest survey. Single-family housing starts, though up, remain 60% below the 2002 pre-bubble pace. Americans' equity in homes is $2 trillion, or 25%, less than it was in 2002 and half what it was at the peak. More than one in every four mortgage borrowers still has a loan bigger than the value of the house, though rising home prices are reducing that fraction slowly.

Still, the upturn in housing is a milestone, a particularly welcome one amid a distressing dearth of jobs. For some time, housing has been one of the biggest causes of economic weakness. It has now—barely—moved to the plus side. "A little tail wind is a lot better than a headwind," says economist Chip Case, the "Case" in Case-Shiller.

From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses. "Manufacturing had led growth and construction had lagged," JPMorgan Chase economists said last week."Now the roles are reversed: Manufacturing growth has slowed as private construction comes to life."

Plenty could go wrong. The biggest threat is a large shadow inventory of unsold homes, homes which owners won't put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices. Or the still-dysfunctional mortgage market could get worse. Or overly zealous regulators or a post-election change in government policy could unsettle mortgage lenders or home buyers.

But the housing bust is over.

U.S. Mortgage Rates Fall To New Records; Refinance Mortgage Rates Drop

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via: TheMortgageReport.com by Dan Green

See the full gallery on Posterous

Mortgage rates fell this week -- again -- as the biggest refinance boom since last decade continues. Freddie Mac reports that the average 30-year fixed rate mortgage rate nationwide fell four basis points to 3.62%, and that the average 15-year fixed rate mortgage rate fell to 2.89%.

 

Mortgage Rates On A 3-Year Slide

Freddie Mac's survey is collected from more than 125 banks around the country with each bank reporting both its "going mortgage rate" as well as any accompanying discount points required to get that rate. The survey showed that banks offering the 3.62% mortgage rate are charging, on average, 0.8 discount points.

Discount points are a one-time closing cost. 1 discount point is equal to one percent of your loan size.

So, using this week's survey as an example, if you are a borrower in Marin County, California; or Fairfax, Virginia, and you are borrowing up to the local conforming loan limit of $625,500, to account for your 0.7 discount points, you should expect to bring an additional $4,379 to closing, or to have that amount "rolled in" to your mortgaged amount for you.

If your loan size is smaller than $625,500, however, your discount points fee will be smaller. Homeowners borrowing at the Dallas, Texas local loan limit of $417,000, for example, would pay just $2,919.

Not everyone will want to pay discount points, however, and the good news is that you don't have to. Mortgages without discount points are always available from banks -- they're just not offered at the 3.62% mortgage rate.

Get a mortgage rate quote with and without discount points to compare your costs and options.

 

15-Year Fixed Rate Mortgage Rate Falls To 2.89%

Freddie Mac's weekly mortgage rate survey showed the following national numbers :

• 30-year fixed rate mortgage : 3.62% with 0.8 discount points
• 15-year fixed rate mortgage : 2.89% with 0.7 discount points
• 5-year adjustable rate mortgage : 2.79% with 0.6 discount points

Note that the Freddie Mac mortgage rate survey does not differentiate between a purchase money mortgages and refinances. Some lenders offer slightly lower-than-average rates on a purchase transaction, and slightly higher-than-average for "special" refinance types including the HARP refinance program or loans for investors with more than 4 properties financed. Mortgage pricing policies vary from bank-to-bank.

 

New Construction Market Expected To Soar This Summer

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via: TheMortgageReport.com by Dan Green

Buyers of new construction are on the clock. With builder confidence rising and new home sales expected to pop, the best time to buy a new home this year may be right this very minute.

Builder Confidence At 5-Year High

After a seasonal dip in April, the National Association of Homebuilders reports that the May Housing Market Index rose 5 points to 29.

The 5-point jump marks the sharpest one-month climb for homebuilder confidence in close to 10 years.

It also raises the benchmark index to a 5-year high.

As an index, the NAHB's homebuilder confidence report is scored from 1-100. Readings north of 50 indicate favorable conditions for builders. Readings south of 50 indicate unfavorable conditions.

The HMI has been below 50 since April 2006. It's never been higher than 78 (December 1998).

Buyer "Foot Traffic" Soaring

The Housing Market Index is different from most home market statistics in that it's a psychological reading as opposed to a physical one. It doesn't measure actual homes sold but builders' expectation for how many homes will sell.

The HMI is a composite of three separate surveys sent to NAHB members. The survey questions are as follows :

1. How are market conditions for the sale of new homes today?
2. How are market conditions for the sale of new homes in 6 months?
3. How is prospective buyer foot traffic?

Based on the responses from homebuilders, the Housing Market Index is scored.

This month, builders are reporting strong improvement across all three surveyed areas. Current home sales are up 5 points from April; sales expectations for the next 6 months are up 3 points form April; and, perhaps most importantly, buyer foot traffic is up 5 points from April and is now its highest point since 2007.

Higher "buyer foot traffic" tells us there's an increased demand for new construction -- the highest in 5 years, actually.

Buying New? Find Your Mortgage Budget.

With buyer traffic up and home supplies down, new construction prices appear set to rise later this summer. And, although builders aggressively compete with home resales and foreclosures for today's home buyers, don't expect to buy a home on a steal.

Builders know their market and price it right.

The good news, though, is that mortgage rates remain low and low downpayment programs are plentiful. In addition to the FHA's 3.5% downpayment program, the VA and the USDA both offer 100% financing to home buyers who meet underwriting criteria.

Freddie Mac 30-Year Fixed Rate Mortgage Rate Falls To 3.78%

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via: TheMortgageReports.com by Dan Green

Freddie Mac reports the 30-year fixed rate mortgage rate at an all-time low of 3.78% this week, down from last week's 3.79%.

The rate is available for mortgage applicants willing to pay an accompanying 0.8 discount points, plus a full set of closing costs. Last week, just 0.7 discount points were required. 1 discount point is equal to 1 percent of your loan size.

Other average mortgage rates as reported in Freddie Mac's weekly mortgage rate survey :

• 30-year fixed rate mortgage : 3.78% with 0.8 discount points
• 15-year fixed rate mortgage : 3.04% with 0.7 discount points
• 5-year adjustable rate mortgage : 2.83% with 0.6 discount points

Note that not all mortgage applicants will be eligible for Freddie Mac's published mortgage rates. The FHA Streamline Refinance use a different pricing model, as does the USDA 100% financing program and the government's HARP program for underwater mortgages.

 

Better Mortgage Rates Start With Better FICO Scores

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via: TheMortgageReports.com by Dan Green

If you plan to use a mortgage for your next home purchase, you’ll want to keep your credit scores as high as possible. Credit scores play an out-sized role in determining for which mortgage product you’ll qualify, and to which rate you’ll be assigned by your lender.

The higher your credit score, the lower your mortgage rate will be.

What Is A Credit Score?

History has shown that the best way to predict a person’s behavior over the near-term future is to look at that person’s behavior in the recent past. It’s a concept similar to the First Rule of Physics — an object in motion tends to stay in motion.

We can apply this theory to consumer credit, too. A person who has recently paid his bills on-time should continue to pay his bills on-time in the near-future.

This is the basis of credit scoring; using your past to predict your future.

To mortgage lenders, your credit score represents your likelihood of making on-time mortgage payments for the next 90 days. “90 days” matters because, after 90 days without payments, a homeowner falls into default.

Higher credit scores correlate with lower default risk which explains why people with high credit scores tend to receive lower mortgage rates than people with low credit scores. This is true across all loan types, including conventional, jumbo, and FHA mortgages.

Like most else in finance, those with the lowest risks get to pay the lowest rates.

Lenders Use The FICO Scoring Model, Exclusively

There are three main credit bureaus in the United States. They are Equifax, Experian and TransUnion. Each offers a bevy of credit-scoring products, available for purchase on their respective websites. Prices range from “free” to several hundred dollars.

None, however, are particularly relevant in the home-buying process. This is because the nation’s mortgage lenders rely on a different credit model — the FICO model.

FICO is named for the Fair Isaac Corporation. It was “invented” in the 1950s and has become the mortgage industry standard for credit ratings. Today, FICO scores are omnipresent to the point that people generically refer to all credit scores as “FICO scores”.

This is akin to calling all adhesive bandages “Band-Aids”. FICO is the brand name — not the product.

FICO scores range from 300-850.

Credit Scores Change Mortgage Rates

Your FICO score has always influenced the mortgage rate for which you’re eligible. In 2008, though, it began to change your loan fees.

In response to major mortgage market losses, in April 2008, both Fannie Mae and Freddie Mac introduced something called Loan-Level Pricing Adjustments (LLPA). Loan-level pricing adjustments are “discount points” added to a mortgage rate, based on a specific borrower’s risk to the lender.

A discount point is a loan fee, paid at the time of closing. 1 discount point is equal to 1 percent of your loan size.

Example : A $300,000 mortgage that’s assessed 1 discount point will have $3,000 in extra fees due at closing.

Fannie Mae and Freddie Mac know that low credit scores correlate to high default rates so, like an insurance policy, they assigned the highest costs to the highest-risk borrowers.

Assuming a 20% downpayment, look at how discount points change based on credit score. Fees get massive for FICOs under 700.

• 740+ FICO  : There are no discount points required. This loan is “low risk”.
• 720-739 FICO :  0.250 discount points are charged to the borrower, or $250 per $100,000 borrowed
• 700-719 FICO :  0.750 discount points are charged to the borrower, or $750 per $100,000 borrowed
• 680-699 FICO :  1.500 discount points are charged to the borrower, or $1,500 per $100,000 borrowed
• 660-679 FICO :  2.500 discount points are charged to the borrower, or $2,500 per $100,000 borrowed

Now, not many new home buyers just have that kind of extra cash just laying around. Therefore, as an alternative to paying discount points with cash, many choose to “roll up” the fees into their respective mortgage rates. In general, 1.000 discount point can be “traded in” for a 0.250 increase to your mortgage rate.

Example : A consumer with a 680 FICO score is required to pay 1.500 discount points at closing, or can alternatively accept a mortgage rate increase of 0.375%.

This is why it’s important to keep your credit score high. There are real dollar costs for having scores under 740.

Improving On Your Credit Score

If your credit score is not as high as you’d like, the good news is that you can take steps to raise it — sometimes without even changing your spending habits.

Low Mortgage Rates Pump Buyer, Builder Confidence

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via: TheMortgageReports.com by Karen Lawson

Single Family Construction Permits Up

The U.S. Department of Commerce reports that housing starts rose in April, with work starting on more single family homes as compared to March. Builders also requested more permits for building single family homes.

During April, builders broke ground at a seasonally adjusted annual pace of 717,000 homes. This represents a 2.6% increase over March 2012, but is lower than January's seasonally adjusted annual pace of 720,000 homes. 

Although residential building permits fell to a seasonally adjusted pace of 715,000, the decline is attributed to a 23% decrease in the volatile apartment construction sector. Permits issued for new single family homes rose by approximately 2%, which suggests improving builder confidence as low mortgage rates prevail.

Improving Builder, Buyer Confidence

Home builders are gaining confidence as more consumers express interest in buying homes.

The National Association of Home Builders/Wells Fargo builder sentiment index reported its highest levels of builder confidence in 5 years in May. Increasing sales and foot traffic are positive signs of consumer interest in purchasing new homes.

Improving employment rates and record low mortgage rates are contributing to builder and home buyer confidence. New construction provides benefits for home buyers and communities by offering more housing choices for home buyers, providing jobs for contractors and construction workers and increasing revenue for communities. 

Low Mortgage Rates Extend Buying Power

Do you want to buy a home, but are uncertain about how much you can afford to spend, or if you can afford to buy? Low mortgage rates provide home buyers with lower monthly payments and the ability to pay off their mortgage loans faster. There are mortgage loan options suitable for many financial situations.

Requesting a current mortgage rate quote is your first step toward determining how much you can borrow for buying a new home or refinancing your current home loan.

FHA Mortgages For Condos : Guidelines About To Loosen?

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via: TheMortgageReports.com by Karen Lawson

The Issue : FHA Restricts Condominium Lending

For buyers of condominiums in places like Chicago, Illinois; New York City, New York; or Minneapolis, Minnesota, the FHA's popular 3.5% low-downpayment mortgage program has been elusive. Because of the FHA's strict condo requirements, few buildings are even FHA-eligible.

For example, any of the following traits can disqualify a condo for FHA financing:

• Investor Concentration Exceeds 50% : The FHA will not currently finance a condominium unit if more than half of the building units are "rentals". This is increasingly common in big cities in which real estate investors are buying foreclosed units and rehabbing and renting.
• Commercial Space Exceeds 25% : The FHA will not currently allow condo financing in buildings for which commercial space (e.g.; retail stores, offices) accounts for more than one-quarter of the entire building square footage. Common areas and walkways do not count toward the 25%.
• More Than 15% Of Units Past-Due on Assessments : The FHA will not currently finance a condominium units if more than 15% of the units in the building are more than 30 days delinquent for assessments.

When a condo is deemed ineligible for the FHA, home buyers cannot use FHA financing in the building, and existing homeowners cannot refinance via the FHA (except via the FHA Streamline Refinance program).

Plans To Loosen Condo Lending Coming?

For home buyers with small downpayments, the FHA offers one of the few mortgage programs requiring less than 5 percent down. It also offers relaxed approval standards for qualified buyers.

This is one reason why there's a push within the FHA to make condo lending less restrictive. It's a plan that's not been publicly released, and it may not pass for weeks or months, but when changes are made, FHA condo loans will be more readily available, and the FHA will be using lending policy to help advance the housing market.

Southern California Home Sales Figures Rise

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via: DSNews.com by Tory Barringer

According to numbers released by DataQuick, last month’s home sales numbers in Southern California experienced a modest climb from last year.

Median home sales prices in Southland rose year-over-year in April for the first time in 16 months. The median price paid for a home in Southland was $290,000 this year, up from $280,000 in March 2012 and April 2011. This increase is attributed to gains in the region’s coastal counties, where home sales made up 71.5 percent of the area’s total, an increase from last year’s 68 percent.

Also cited as cause for this year’s higher numbers is the fact that foreclosed and discounted properties made up a smaller portion of sales.

While April’s $290,000 median still sits far below the high point of this real estate cycle-$505,000 in mid-2007-DataQuick president John Walsh said that the climbing numbers could be a good sign.

“The housing market continued its painfully slow crawl back toward normalcy last month,” Walsh said. “You can see it in the fading role of foreclosures, the uptick in median prices here and there, and the higher levels of sales in coastal counties.”

He warned, however, that there are many other factors to consider when looking at Southland’s real estate numbers.

“Of course, there are still a lot of things that make this market abnormal,” he said. “Investor and cash buying are still unusually robust. The jumbo loan market has yet to recover, and the use of plain-vanilla adjustable rate mortgages, or ‘ARMs,’ remains far below normal.”

ARMs made up 7.1 percent of April’s Southland home purchase loans, down from 8.5 percent a year earlier. Since 2000, ARMs made up a monthly average of about 36 percent of purchase loans.

In contrast to recent trends, the number of low-cost homes sold in Southland fell due to the decreased number of foreclosures being sold and the shrinking inventory of homes for sale. The number of homes sold in April for less than $200,000 was 4.7 percent lower than last year’s number while sales between $200,000 and $400,000 rose 5.5 percent.

Distressed sales, a combination of foreclosure resales and short sales, made up about 47 percent of April’s resale market-the lowest percentage since April 2008. Foreclosure resales accounted for 28.6 percent of distressed sales while short sales made up 18.4 percent.

Investor activity held near a record-high level, and the number of cash buyers remained at double the historical average. Cash purchases made up 31.5 percent of April home sales, just under last year’s 31.8 percent. Cash buyers paid a median of $225,000, $15,000 more than a year ago.

Absentee purchases made up 27.8 percent of Southland’s sales last month, an increase from 25.4 percent in April 2011. Absentee buying was greatest in the Inland Empire, where it represented 35.8 percent of all homes sold in April.

Last month’s typical mortgage payment for Southland buyers was $1096, down from last year and 62 percent less than the current real estate cycle’s peak in July 2007.

While foreclosure activity is high by historical standards, it has dropped greatly from its peak in recent years. DataQuick reported that financing with multiple mortgages is very low, and down payment sizes are stable.

Mortgage Rates Respond To Housing Starts Data

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Slowly and steadily, the housing market plods ahead. In April, for the third-straight month, the data backed up what today's home buyers have already found out -- in many U.S. markets, the bottom is behind us.

via: TheMortgageReports.com/Dan Green

Housing Starts Rise For 3rd Straight Month

The Census Bureau reports that Single Family Housing Starts rose 2 percent in April, climbing to 492,000 units nationwide on a seasonally-adjusted, annualized basis. 

A "housing start" is defined a home on which ground has broken and, after accounting for the upward revision to March's Housing Starts results, last month's Single-Family Housing Starts marks the third-straight month during which starts have climbed.

In addition, the number of building permits for single-family homes rose, too, in April.

As compared to the month prior, the number of permit issued to build new homes rose 2 percent, notching its second-highest reading since March 2010 -- the month before the end of that year's federal home buyer tax credit.

More than 85 percent of permit-granted homes break ground within one month.

Mortgage Rates Ignoring Housing Data?

When the U.S. economy sank last decade, employment and housing were two main casualties. More than 7 million jobs were lost, half of which have since been recovered.

The housing market, however, has a longer climb back. After dropping close to 19% from its April 2007 peak, on a national basis, values have remained somewhat steady. Some markets including San Francisco, California; Phoenix, Arizona.; and Detroit, Michigan have lifted from their respective lows. 

Other markets, including Atlanta, Georgia, have failed to make the same bounce.

This is one reason why Wall Street reacts more to jobs data than to housing data -- the jobs market is closer to recovery and its growth is more even. The other reason is Europe.

As Greece, France, and Spain slog through political and economic reform, they've spawned market uncertainty which, in turn, is driving investors to U.S mortgage-backed bonds. Mortgage bonds are viewed as a low-risk investment and a safe place to "park money" when global economies move toward distress.

In most months, the strong showing in U.S. Single-Family Housing Starts would lead all types of mortgage rates higher -- conventional mortgage rates, FHA mortgage rates, VA mortgage rates, and for jumbo loans, too. This month, though, with the future of the Eurozone uncertain, mortgage rates are slipping.

Check Your Housing Budget With A Real Mortgage Rate

Whether you're buying new construction, or buying an "existing home", you'll want to know what the home will cost you monthly, and to do that, you'll need a legitimate mortgage rate quote.

With mortgage rates low and low-downpayment programs including the FHA's 3.5% program for purchases up to $729,750, and the USDA's 100% program in qualified suburban and rural markets, you may find home affordability surprisingly high. Get started with a rate quote.

Home affordability in California reaches 24-year high

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via: HousingWire.com by Kerri Panchuk

Home affordability in California reached a 24-year high in the first quarter of 2012, with 56% of homebuyers able to afford a median-priced, existing single-family home in the state, the California Association of Realtors said. That is up from a home affordability rate of 55% in the fourth-quarter of last year and 53% in the first quarter of 2011.

CAR has been publishing its traditional housing affordability index since 1988 and described the first quarter of 2012 as the most affordable quarter yet.

To qualify as a homebuyer who could afford a home valued at California's median price of $276,040, a California buyer needed an annual income of $55,688 in the first quarter, CAR said.  

Counties located in the greater San Francisco Bay area saw housing affordability levels either rise or remain stable depending on the county the home resided in.

In Contra Costa County, affordability declined by one percentage point. With an affordability rate of 78% on the CAR index, San Bernardino County was the most affordable in the state, while San Francisco County is the least affordable with only 29% of households able to purchase a median-priced home within the county.

 

 

Home prices tick up in Southern California

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via: HousingWire.com by Kerri Panchuk

Southern California is beginning to see signs of a tepid recovery with the median sales price in the area edging up to $290,000 in April, according to real estate analytics firm DataQuick.

Compared to the months of March 2012 and April 2011 that is a 3.6% price hike, with the median price in both of those periods hitting $280,000 in the southern part of the state.

This is the first year-over-year price increase in 16 months, suggesting home affordability levels are driving Southern California home sales along with declining inventory levels and low-cost foreclosures.

Even though prices in April were higher than a year ago, they are still well below average, DataQuick said.

The April median price is 17.4% above the $247,000 median sales value recorded in the trough of the 2009 recession, but still 41.6% below the $505,000 peak reached in mid-2007.

"The housing market continued its painful slow crawl back toward normalcy last month. You can see it in the fading role of foreclosures, the uptick in median prices here and there, and the higher levels of sales in coastal counties," said John Walsh, DataQuick president.

There are several other factors keeping the recovering market in an abnormal state. Among them is a lack of a recovery in the jumbo loan market and the fact that many homeowners are still underwater, DataQuick said.   

A total of 19,284 homes and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange Counties in April. That is down 3.4% from 19,953 in March and up 5.1% from 18,344 in April 2011.

Low-ball offers decline in some housing markets

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Realty agents say low-ball offers on homes for sale, typically those that are 25% or more below list price, are disappearing in high-demand markets.

via: LATimes/Kenneth R. Harney

WASHINGTON — It's not something that economists routinely track, but it provides a rough sense of what's happening in local real estate markets. Call it the low-ball index.

A year ago, according to researchers at the National Assn. of Realtors, 1 out of 10 members surveyed in a monthly poll complained about low-ball offers on houses listed for sale. In the latest survey — conducted during March among a sample of 4,500 agents and brokers across the country and not yet released — there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels — fewer houses available to sell — and multiple offers on well-priced listings.

A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25% or more below list. Low-ball offers increase sharply when there's a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I'll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by low-balling their offers are ending up at the back of the line — their contracts either rejected out of hand or countered close to the original asking price.

In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to low-ball offers. Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., said multiple offers are "the rule, not the exception," in her area, and many transactions end up with final contract prices higher than the listing.

"Sure, I've had a few buyers try to low-ball and they wouldn't listen," she said, "but that didn't work out well for them."

Similar trends are underway in more moderately priced markets. Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said, "Low-ball offers are down a lot because we're seeing more homes come on the market that are more realistically priced" — sellers have absorbed the hard lessons of the recession years about what the market can bear.

Even when buyers submit shockingly low bids, sellers no longer are so insulted that they send the contract back without a counteroffer. Now they negotiate aggressively and the final number ends up close to the original asking price. For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. Although the seller was irritated, after a series of negotiations the low-ball buyer settled for a final price of $230,000.

OutsideWashington, D.C., in the Northern Virginia suburbs, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, said Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous low-ball offer reminiscent of the recession years tell listing agents "don't even bother" with them. After all, there's an excellent chance there will be a realistic offer shortly — maybe more than one.

In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., said low-ball frequency and efficacy depend on the specific neighborhood or town. "We still see them, and we try to work with them" in communities where prices are soft and the effects of tough economic times persist, she said.

Elsewhere, although low-ball offers are down, Orr urges sellers to stick with it and negotiate. Recently a low-baller came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.

Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while low-ball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today's environment. But Matarese has no problem with this — "you can't blame a buyer for trying to get a good deal," she said, but the fact remains: They usually risk losing the house.

The take-away here: Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012's environment — at least in rebounding markets — it could be counterproductive if you truly want to buy.

 

HARP 3.0 : What It Means, Who May Qualify

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via: TheMortgageReports.com/Dan Green

HARP 2.0 is just one month old and already there's talk of a HARP 3.

The rumored program was born January 2012, conceptually introduced in the president's State of the Union address. Since that date, the notion that "every responsible homeowner" should be able to refinance to today's low rates has gained traction.

In some form, it's likely that HARP 3.0 will pass.

In Brief : The HARP Refinance Program

Home Affordable Refinance Program (HARP) is a government-backed refinance program. It was launched in 2009 as a means to stimulate the economy. At the time, mortgage rates were falling but few homeowners were able to refinance because they had lost too much equity in their respective homes.

HARP waived certain loan-to-value requirements, and close to 1 million U.S. households took advantage.

Then, in 2012, HARP was expanded. Dubbed Harp 2.0, all loan-to-value requirements were suddenly waived, as were proof of income requirements; proof of asset requirements; minimum credit score requirements; and, as a host of other qualifiers. In many cases, HARP 2.0 won't even ask for a home appraisal.

The retooled HARP 2.0 was specifically designed to remove refinancing hurdles. Consider the program's three basic requirements :

1. To use HARP, you must have less than 20% equity in your home
2. To use HARP, you must have paid your loan on-time for the last 6 months
3. To use HARP, your loan must have been securitized prior to June 1, 2009

There's a fourth requirement, too -- HARP requires that your mortgage be backed by either Fannie Mae or Freddie Mac. However, with the rumored passage of HARP 3.0, that requirement will be no longer.

With HARP 3.0, everyone who meets the above requirements will be eligible to use HARP to refinance to today's low mortgage rates.

HARP 3.0 : Help For Non-GSE Mortgages

HARP 3.0 is not yet passed, and may never pass. But it makes for some interesting talk. HARP 3.0 would target homeowners whose mortgages are not backed by Fannie Mae or Freddie Mac.

This is a big deal because, although the Fannie Mae-Freddie Mac-FHA triumvirate controls more than 90% of today's new mortgage originations, that wasn't the case from 2001-2007. Last decade, non-GSE lending was a major part of the U.S. housing market.

For example, Alt-A mortgages accounted for 27.5% of mortgage originations in 2005. Today, each of these homeowners is locked out from HARP. HARP 3.0 would allow these Alt-A customers to (finally!) refinance their home loans.

In addition, there were lots of "A Paper" mortgages that went to sub-prime investors last decade because, at the time, the sub-prime market offered lower mortgage rates than the conforming market did. Ludicrous, but true. Conforming, 30-year fixed rate mortgage rates were 5.50 percent in mid-2005.

By contrast, sub-prime 30-year fixed rates were just 5.25%. Which would you have taken?

And, lastly, HARP 3.0 would help homeowners with jumbo mortgages that, in today's market, would not be jumbo mortgages.

Last decade, before conforming loan limits were raised to $625,500 in "high-cost areas" throughout California, Virginia, Maryland, and New York, for example, homeowners who bought or refinanced were relegated to non-conforming loan products -- loans that met typical underwriting guidelines but that were too big for Fannie Mae or Freddie Mac to purchase.

After home values fell, although their mortgages met Fannie Mae loan standards; and, although their mortgages were within Fannie Mae loan limits, these homeowners were unable to use HARP 2.0 because their mortgages weren't backed by the government. They were held by a bank, such as Wells Fargo or Bank of America.

With HARP 3.0, these "high-cost", jumbo homeowners would get the chance to refinance.

HARP 3 Candidates

We don't know when HARP 3.0 will be made official (if ever). Nor do we know who will qualify for HARP 3.0 when it's passed. However, based on HARP history and talk from Washington, D.C., we can fathom a few guesses.

Here are a few "borrower types" that HARP 3.0 is expected to target  :

• A self-employed person who used stated income loan for the original mortgage, and can verify their current income via federal tax returns
• A "prime" borrower who used a sub-prime mortgage because mortgage rates were lower and/or fees were less as compared to a conforming one
• A jumbo mortgage homeowner who lives in a "high-cost area" whose original mortgage was for between $417,000 and $625,500
• A wage earner who used a stated income and/or stated asset mortgage for convenience
• Sub-prime borrower who has paid mortgage as agreed and can verify income and assets
• An Alt-A borrower whose FICOs were low at date of origination, but have since improved

There are literally millions of U.S. homeowners who would meet HARP 3.0 eligibility standards, opening today's low mortgage rates to all of them.

Compare HARP Mortgage Rates

HARP 3.0 is an interesting product. It's the extension of HARP 2.0 to homeowners who used private-market mortgage money, either because it was cheaper than a government loan, or because no suitable GSE product existed.

So, whether you're a HARP 2.0 candidate, HARP 3.0 candidate, or just want to see today's mortgage rates look like, stop a take a quote. HARP mortgage rates are comparable to non-HARP rates, and fees are often fewer.

Fed Minutes Expose “Tightly-Wound” Mortgage Rate Environment

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via: TheMortgageReports.com/Dan Green

Today is a bad day to be a mortgage rate shopper. Mortgage rates rose sharply Tuesday afternoon after the Federal Reserve released the minutes from its March meeting.

Mortgage rates of all types -- FHA, conventional, jumbo, VA and USDA -- are rising. In some cases, sharply.

Fed Minutes Move Mortgage Rates

The Federal Open Market Committee meets eight times annually to discuss U.S. monetary policy and, when appropriate, to add, remove, and/or revise policy already in place.

3 weeks after the FOMC meets, the Federal Reserve publishes what's known as the Fed Minutes. The Fed Minutes are similar to the minutes from a condo board meeting, or a corporate conference call -- it summarizes the conversations that shaped the meeting, and is loaded with detail.

Investors pay close attention to the Fed Minutes because the Federal Reserve swings a big stick with respect to Wall Street.

Since 2008, Fed policies have helped drive stock markets up and bond pricing down, creating the low mortgage rate environment to which we've all grown accustomed. As a result, when investors believe the Fed is close to withdrawing said policies, mortgage rate rise.

That's what happened Tuesday. Mortgage rates rose in all 50 states.

 

Fed : No Rush For QE3 , New Stimulus

The March Fed Minutes show a Federal Reserve committed to improving the U.S. economy, but clearly within a "Wait-and-See" mode. After 2 rounds of quantitative easing, Fed members are watching employment data improve, housing numbers rebound, and an increase in consumer spending.

Before launching new stimulus a la QE3, the Federal Reserve seems content to ride out the current spate of economic expansion. Wall Street wasn't prepped for that.

Based on comments from Fed Chairman Ben Bernanke made last week, investors thought a new stimulus round was imminent; likely to follow even the slightest economic hiccup. Today, those expectations are reversed.

Based on the March Fed Minutes, the Federal Reserve is unlikely to add new market stimulus, short of the economy losing its momentum, or deflation setting in. And, right now, with growth occurring steadily and consistently, and with inflation running just short of 2 percent, markets are at risk for neither.

30-year fixed rate mortgage rates had famously dropped below 4 percent last week.

They're back above 4 percent now.

 

30-Year Mortgage Rates Back Above 4 Percent

Since 20 weeks ago, mortgage rates have held within a very tight range. They've dropped as low as 3.875% for borrowers willing to pay discount points, but have failed to break below that.

One thing that's for certain, though, mortgage rates are wound tighter than a coil.

Each time they rise, they don't rise slowly -- they rise quickly. This tells us that mortgage rates are unsustainable at their current, sub-4 levels. As a rate shopper, consider this your call-to-action. It's time to start that refinance. It's time to lock that mortgage rate.  Get started with a rate quote.

 

Home Prices Have Been Rising for Three Months: Report

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via: DSNews.com/Carrie Bay

Standard & Poor’s reported Tuesday that it’s closely watched Case-Shiller index declined in January for the fifth straight month, with both the 10-city and 20-city composite readings slipping 0.8 percent from December.

But according to John Burns Real Estate Consulting (JBREC), that’s stale news and doesn’t reflect what’s actually happening in the market right now. In fact, the independent research company says home prices are rising.

JBREC conducted its own analysis of home prices in 97 markets and found that over the January-to-March period prices are up in 90 of them. The average price increase over the last three months is 1.1 percent, or a 4.5 percent annual rate, according to data issued by JBREC just before S&P’s Case-Shiller release.

The company also found that home prices have been trending up nationally since January, and even more markets have turned positive recently, with 93 of the 97 markets it analyzed showing appreciation over the last month.

So why are other industry indices still painting a picture of the doom and gloom of freefalling home prices? Wayne Yamano, VP and director of research for JBREC, says it’s because most price indices are on a three-month lag.

Yamano explains that after hundreds of hours of research vetting 23 data sources and running calculation after calculation, JBREC developed the Burns Home Value Index (BHVI), which calculates home values based on prices that are set at the time purchase contracts are negotiated and signed.

Nearly all other indices are based on when the purchase transaction closes, he says, which is typically two months after the purchase contracts were negotiated. Then, it takes one to two months for the closing price data to be compiled and reported, according to Yamano.

He contends that the BHVI is a better assessment of current changes in home prices and precedes median price data from the National Association of Realtors by three months and the S&P/Case-Shiller index by four to six months.

“It is current because it uses what is happening in MLS databases all over the country, as well as some leading indicators we have determined are reliable,” Yamano explained. “We call it a Home Value index because it is partially based on an ‘electronic appraisal’ of every home in the market, rather than just the small sample of homes that are actually transacting.”

JBREC has calculated BHVI index values for the United States and 97 major metro areas, with history going back to January 2000.

“The slow housing market recovery is underway, and it can accelerate or turn down quickly,” said Yamano. “The future is uncertain, and it is even more uncertain when you are using data that is three months old.”

February Pending Home Sales Climb

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via: CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Pending home sales in California gained ground for the second consecutive month in February, while the share of equity sales posted higher after two months of decline.

C.A.R.’s Pending Home Sales Index (PHSI)* rose from a revised 102.3 in January to 127.8 in February, based on signed contracts.  The index also was up from the 111.8 index recorded in February 2011, marking the tenth consecutive month that pending sales were higher than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

“A lack of inventory in the bank-owned (REO) and short sale market was a contributing factor to the decline in share of distressed sales in February,” said C.A.R. President LeFrancis Arnold.  “In fact, REO inventory declined 24 percent in February from the previous year, while short sale inventory dropped 17 percent during the same period.”
 
• After declining for two straight months, equity sales increased in February, making up 51.1 percent of home sales in February.  Equity sales made up 49.9 and 44.8 percent of all sales in January 2012 and February 2011, respectively.
• Meanwhile, the total share of all distressed property types sold statewide decreased in February to 48.9 percent, down from January’s 50.1 percent and from 55.2 percent in February 2011.
• The share of short sales dipped slightly in February.  Of the distressed properties sold statewide in January, 23 percent were short sales, down from the previous month’s share of 23.8 percent but up from last February’s share of 22.9 percent.
• The share of REO sales also edged down in February to 25.2 percent, down from January’s 25.9 percent and down from the 31.9 percent recorded in February 2011.

Pending Home Sales Index Suggests Strong Spring Housing Market

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via: TheMortgageReports.com/DanGreen

No surprise here. Inexpensive homes and ultra-low mortgage rates have turned into a good thing for U.S. housing.

The nascent recovery that began last October is ongoing. The number of home resales going under contract to first-time buyers, real estate investors, and everyone else remains high. Housing has built a nice clip of momentum, from California to New York.

Pending Home Sales Edge Lower In February

The Pending Home Sales Index is a monthly report from the National Association of REALTORS®. It measures the number of homes under contract to sell, but not yet sold, nationwide.

In February, the Pending Home Sales Index slipped 0.5 percent from the month prior, to 96.5.

February's reading is a retreat from January's high, but still marks the third-highest Pending Home Sales Index since April 2010, an important month in housing market footnotes. April 2010 is the month that the federal home buyer tax credit expired.

"Third-highest" isn't so terrible, either.

The top 4 months have been the most recent 4 months. The six-month trend in the Pending Home Sales Index is plainly higher. The Pending Home Sales Index is up 9% percent versus a year ago.

 

Pending Home Sales Index : The Future Of Housing

The Pending Home Sales Index is unique among published housing data. As such, we're compelled to analyze it differently as compared to other housing market indicators.

In contrast to the Existing Home Sales report or the Case-Shiller Index, for example, which report on past housing activity, the Pending Home Sales Index is the housing market's lone forward-looking indicator. It attempts to predict the future.

We know that 80% of homes under contract close within 60 days, for example, so when we look at the Pending Home Sales Index, it gives us a reasonable idea of what the Existing Home Sales report will look like 2 months hence.

Based on that, the spring housing market should meet analysts expectations, and may even exceed them. We can also say with near 100% certainty that this year's home sales figures will best last year's home sales by a boatload.

On a regional basis, compared to last year, contract activity is up big :

• Northeast Region: +18.4 percent annually
• Midwest Region : +19.0 percent annually
• South Region : +7.8 percent annually
• West Region : -1.8 percent annually

The Northeast and Midwest regions made huge gains versus last year and the South region made sizable gains, too.

This is no surprise to first-time and repeat home buyers in places like Maryland, Illinois and Georgia. There is bona fide competition for homes there. When a new home goes on the market -- if it's priced right -- it's headed under contract quickly.

There are stories of this happening in pockets of the West Region, too.

In Silicon Valley, for example, one such anecdote centers on a home receiving 30 competitive offers within a day of listing for sale. Thirty. It's an atypical outcome, but it's happening -- in California and elsewhere, too. The housing market is off its bottom.

 

See Your Likely Mortgage Payment

If you're in the market for a new home, or just kicking the housing market tires, you may want to get a feel for what your mortgage payment would resemble. Start with a home purchase price, determine your probably downpayment, and use today's low mortgage rates to see how cheap your payments can be.

Home affordability remains an all-time these days. With the Pending Home Sales Index heating up, however, it points to higher home prices ahead.

Mortgage Rates Rising : Fundamentals Or Seasonal?

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via: TheMortgageReports.com/DanGreen

 

Mortgage rates have jumped over the last 10 days. Conforming mortgage rates, FHA mortgage rates, VA mortgage rates -- everything is up. It's the result of an improving U.S. economy, a risk-hungry Wall Street, and a simple Federal Reserve statement saying the turnaround may be closer than we think. Or is it?

Mortgage rates are rising, that's for sure. But, maybe that's because it's spring.

 

Mortgage Rates Highest In 5 Months

Government mortgage-backer Freddie Mac compiles and publishes a weekly "national mortgage rate", the result of a 125-bank survey of current mortgage rate conditions.

This week's mortgage rate survey shows that, within just a few days, mortgage rates leaped from historical lows straight to their highest levels since October of last year.

Mortgage rates increases across the board last week :

• 30-year fixed rate mortgage : 4.08 percent, up 0.16 from the week prior
• 15-year fixed rate mortgage : 3.30 percent, up 0.14 from the week prior
• 5-year adjustable rate mortgage : 2.96 percent, up 0.13 from the week prior

In order to get these mortgage rates, though, Freddie Mac said mortgage applicants should expect to pay big fees. The Freddie Mac "average" mortgage rates are only available with 0.8 discount points paid at closing plus a complete set of closing costs. This means that some people pay more than Freddie Mac's average amount, and some pay more.

In both cases, mortgage fees are higher as compared to 5 months ago.

 

Are Mortgage Rates Seasonal?

The mortgage rate run-up started after the Federal Reserve's March 13 statement in which it said the U.S. economy may be expanding faster than previously expected. This triggered an equity market rally, which occurred at the expense of mortgage-backed bonds.

At the same time, there has been a series of "positive" news for the U.S. economy. The jobs market is coming back; housing shows life; the Eurozone appears to be making progress with its sovereign debt problems. Oil prices are rising.

If these stories sound familiar, it's because we talked about them in March 2010, and in March 2011 as well.

Hope springs eternal, it seems -- especially in Spring. Unfortunately for mortgage rate shoppers in places like Dallas, Texas; Orange County, California; and Outer Banks, North Carolina, when Wall Street feels hope, mortgage bonds lose. It's why mortgage rates have raced higher since last week.

 

Hope can fade, though, and in 2010 and 2011, it did. In 2010, the April volcanic eruption of Eyjafjallajökull in Iceland interrupted European economic output, putting mortgage rates on a multi-month downward trajectory.

In 2011, Greece and its debt issues resurfaced in May, which played a large role in driving U.S. mortgage rates down until early-2012.

Could the optimism of March 2012 vanish by April? Could mortgage rates resume falling? Of course they could.

 

See Today's Mortgage Rates

If you're shopping for a mortgage -- either for HARP, for the FHA Streamline Refinance, for a home purchase, or just to refinance -- expect for mortgage rates to change frequently. The rates you're quoted today may not be valid tomorrow.

Such is the nature of the mortgage rate market. Stay current on mortgage rates and be wary of change. Especially now that it's spring.

Mortgage Rates Up, With 30-Year Fixed Above 4 Percent

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via: DCNews.com/Esther Cho

Moving along side higher yields on bonds, mortgage rates continued to climb upwards, with the 30-year fixed-rate mortgage above the 4 percent benchmark for the first time since October 27, 2011, according Freddie Mac’s Primary Mortgage Market Survey.

“Bond yields rose over the past two weeks in part due to an improving assessment of the state of the economy by the Federal Reserve, better than expected results of commercial bank stress tests and the likelihood of a second bailout for Greece,” said Frank Nothaft, VP and chief economist for Freddie Mac.

The 30-year fixed-rate averaged 4.08 percent (0.8 point) for the week ending March 22. Last week, the 30-year averaged 3.92 percent, and during this time last year, it averaged 4.81 percent.

The 15-year fixed-rate managed to stay below 4 percent and averaged 3.30 percent (0.8 point), up from last week when it averaged 3.16 percent. Last year at this time, the 15-year fixed-rate averaged 4.04 percent.

The 5-year ARM inched up to 2.96 percent (0.7 point); last week, it averaged 2.83 percent. Like other averages, the 5-year ARM is still down compared to last year when it stood at 3.62 percent.

The 1-year ARM increased to 2.84 percent (0.6 point) this week. Last week, it averaged 2.79 percent and 3.21 percent during this time last year.

Bankrate, which uses data provided by the top 10 banks and thrifts in the top 10 markets, reported the 30-year fixed-rate mortgage climbed 14 basis points to 4.29 percent, a 5-month high.

The 15-year fixed-rate rose to 3.48 percent, up 10 basis points, and the five-year ARM also went up 10 basis points to 3.24 percent, according to Bankrate. The 7-year ARM moved upwards to 3.43 percent.

ECONOMY: San Diego poised for rebound

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via: NCTimes.com/Eric Wolf

San Diego County's economy is poised to rebound, and it will outpace a sluggish national recovery, US Bank CEO Richard Davis said Friday.

The national economy is at "halftime," Davis said. The worst of the recession is past, but it will be five to seven years before jobs and GDP have recovered, Davis said at an annual real estate conference held by the Burnham-Moores Center for Real Estate at University of San Diego. In a post-speech interview, he said San Diego, with its diverse jobs sector and experience with the boom and bust cycle, was ready to start growing again.

"California is already stronger and coming back faster than the rest of the country," Davis said in his interview. "And San Diego is one of the stronger communities in California."

The recession that hit the national economy in 2007 grew out of the financial sector, largely thanks to bad loans and bad securities. Such recessions take far longer to cure than a traditional recession, Davis said. Thus, recovery will be slow.

But he said California was already starting to come back, and San Diego, thanks to its diverse economy of biotech, high tech, and military businesses, is one of the stronger communities in the state. He also said that San Diego has long experience in dealing with booms and busts in the economy, which helps local businesses know what to do in these situations.

He particularly praised the multi-family sector, because it's attracting investment and creating construction jobs. San Diego County is expecting to see 1,991 new apartment units built this year, which is about five times as many as last year, according to MarketPointe Realty Advisers. But he also said low-interest rates have protected the commercial sector from the kind of foreclosure implosion that ruined the housing market.

The housing market has a tough road ahead of it, though, Davis said. Lending standards tightened dramatically after a foreclosure crisis began in 2007. Since then, banks limited their loans to the most qualified candidates. Many real estate agents say standards have tightened too much, and even their most qualified clients can't get loans. 

"That's not likely to get better soon," Davis said.

A recent mortgage settlement, plus new rules for dealing with customers who stop making mortgage payments, dramatically raised the risk of mortgage lending, he said. Plus, new rules make it hard for banks to raise interest rates on risky customers. Combined, those rules and risks motivate lenders to only give loans to the least risky customers. He said that the current state of affairs should persist for at least three years, after which he hopes the housing market will have started to grow more consistently, and lending standards can loosen.

He expressed particular concern for housing in the Inland Empire, including Southwest Riverside County. He said high gas costs, and a trend toward apartment renting in big cities, could suppress house values in exurban markets ---- like Temecula and Murrieta.

"We may have to raze a lot of houses," he said. "We may have built a lot of houses in the wrong place."

HARP Program : The Complete HARP II Eligibility Requirements

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via: TheMortgageReports.com/Dan Green

UPDATE (March 20, 2012) : The government's new HARP 2.0 Refinance Program is available to U.S. homeowners as of March 17, 2012. This post is accurate and up-to-date.

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance.

Here are the details of the government's new 2012 HARP refinance program.

 

What Is HARP?

HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program.

The program is also known as the Making Home Affordable plan, the Obama Refi plan, DU Refi +, and Relief Refinance.

In order to be eligible for the HARP refinance program :

1. Your loan must be backed by Fannie Mae or Freddie Mac.
2. Your current mortgage must have a securitization date prior to June 1, 2009

If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.

HARP : Questions and Answers

Do these question-and-answers account for the "new" HARP mortgage program?

Yes, everything you are reading is accurate as of today, March 20, 2012. This post includes the latest changes as rolled out by the Federal Home Finance Agency on October 24, 2011, and as confirmed by Fannie Mae and Freddie Mac on November 15, 2011. HARP 2.0 was formally released by Fannie Mae and Freddie Mac March 17, 2012.

Is "HARP" the same thing as the government's "Making Home Affordable" program?

Yes, the names HARP and Making Home Affordable are interchangeable.

How do I know if Fannie Mae or Freddie Mac has my mortgage?

Fannie Mae and Freddie Mac have "lookup" forms on their respective websites. Check Fannie Mae's first because Fannie Mae's market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

If my mortgage is held by Fannie Mae or Freddie Mac, am I instantly-eligible for the Home Affordable Refinance Program?

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

My mortgage is held by Fannie/Freddie. Now what do I do?

Find a recent mortgage statement and write "Fannie Mae" or "Freddie Mac" on it -- whichever group backs your home loan -- so you don't forget. Give that information to your lender when you apply for your HARP refinance.

My mortgage is backed by Wells Fargo. Am I eligible for HARP?

It's possible that your mortgage is backed by Wells Fargo, but the more likely answer is that Wells Fargo is just your mortgage servicer; the bank that collects your payments. Wells Fargo backs very few of its own loans. Most loans for which payments are sent to Wells Fargo are backed by either Fannie Mae or Freddie Mac. Double-check with Fannie Mae and Freddie Mac before assuming Wells Fargo backs your loan.

My mortgage is backed by Bank of America. Am I eligible for HARP?

Bank of America does back some of its own loans, but the more likely answer is that Bank of America is your mortgage servicer; the bank that collects your monthly mortgage payments. Bank of America backs very few of its own loans. For most loans for which payments are sent to Bank of America, Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae and Freddie Mac to make sure Bank of America doesn't hold your loan.

My mortgage is backed by Chase. Am I eligible for HARP?

There is a chance that Chase backs your loan, but what's more likely is that Chase is just your mortgage servicer; the bank that collects your payments each month. Chase backs very few of its own loans. For most loans for which payments are sent to Chase, you'll find that Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae's and Freddie Mac's websites to make sure your loan is not held by Chase.

What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?

If neither Fannie nor Freddie has record of your mortgage, your loan is not HARP-eligible. However, you may still be eligible for a "regular" refinance to lower rates. Use this form to get a rate quote to see your options. Or, if your mortgage is insured by the FHA, use the FHA Streamline Refinance program. The FHA Streamline Refinance helps underwater homeowners, too.

Does HARP work the same with Fannie Mae as with Freddie Mac?

Yes, for the most part, the HARP mortgage program is the same with Fannie Mae as with Freddie Mac. There are some small differences, but they affect just a tiny, tiny portion of the general population. For everyone else, the guidelines work the same.

Am I eligible for the Home Affordable Refinance Program if I'm behind on my mortgage?

No. You must be current on your mortgage to refinance via HARP.

I've been told by my bank that I'm not eligible for HARP. I think my bank is wrong. Can I get a second opinion?

If you've been turned down for HARP but believe that you're eligible, apply with a different bank and see what happens. Different banks are using different variations of the HARP 2.0 program. The edits are subtle, but they're enough to cause some people to get denied who should otherwise have been approved. If you've been turned down for HARP 2.0, use this form to get a rate quote from a different bank.

What are the HARP program's mortgage rates?

Mortgage rates for the HARP mortgage program are the same as for a "traditional" refinance. There is no "premium" for using the HARP program.

Will the Home Affordable Refinance Program help me avoid foreclosure?

No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It's meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today's low mortgage rates.

What are the minimum requirements to be HARP-eligible?

First, your home loan must be paid on-time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the HARP mortgage program before -- only one HARP refinance per mortgage is allowed.

My mortgage was securitized shortly after the HARP deadline of May 31, 2009. Can I get a waiver or exception?

No, there are no "date exceptions" for HARP. If your loan was not securitized on, or before, May 31, 2009, you cannot use HARP.

If I refinanced with HARP a few years ago, can I use it again for HARP II?

No. You can only use the HARP mortgage program one time per home. If you used HARP 1, you cannot use HARP 2.0.

I refinanced into a HARP loan a few years ago, but my bank never told me it was a HARP loan. I feel like I was lied to. Can I use HARP again under the HARP II program?

No. You can only use the HARP mortgage program one time per home. If you used HARP 1, you cannot use HARP 2.0.

Is there a loan-to-value restriction for HARP?

No. All homes -- regardless of how far underwater they are -- are eligible for the HARP program. 

I am really far underwater on my mortgage. Can I use HARP?

Yes, you can use HARP even if you're really far underwater on your mortgage. There is no loan-to-value restriction under the HARP mortgage program so long as your new mortgage is a fixed rate loan with a term of 30 years or fewer. If you use HARP to refinance into an adjustable-rate mortgage, your loan-to-value is capped at 105%.

Maybe I wasn't clear. I am really, really far underwater on my mortgage. Are you sure I can use HARP?

Yes, I am sure. The new HARP mortgage program specifically has no loan-to-value restriction so that homeowners in Florida, California, Arizona and Nevada can take advantage of it. You can have 300% loan-to-value, and still be HARP-eligible. HARP is now unlimited LTV for fixed rate loans with 30-year terms or less.

If I refinance with HARP using an ARM, do I still get "unlimited LTV"?

No, if you use an ARM for HARP 2.0, you are limited to 105% loan-to-value. Only fixed rate loans get the unlimited LTV treatment.

Will my home require an appraisal with the HARP mortgage program?

Sort of. Although your home's value doesn't matter for the HARP mortgage program, lenders will run what's called an "automated valuation model" (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway -- just to make sure your home is "standing".

Is HARP the same thing as an FHA Streamline Refinance?

No, the HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. The programs have similarities, however.

I have an FHA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for an FHA loan. If your current mortgage is backed by the FHA, and your home is underwater, use the FHA Streamline Refinance program. Click here to read about the FHA Streamline Refinance program.

I have a USDA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for a USDA loan. If your current mortgage is backed by the USDA, and your home is underwater, use the USDA's Refinance program. Click here to get USDA mortgage rates.

I have a VA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for a VA loan. If your current mortgage is backed by the VA, and your home is underwater, use the VA's IRRRL program. Click here to get VA mortgage rates.

Does Ginnie Mae participate in the HARP Refinance program?

No, Ginnie Mae does not participate in the HARP Refinance program. Ginnie Mae is associated with FHA mortgages -- not conventional ones. HARP II is for conventional mortgages only.

Do I have to HARP refinance with my current mortgage lender?

No, you can do a HARP refinance with any participating mortgage lender.

So, I can use any mortgage lender for my HARP Refinance?

Yes. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender. 

My current bank says that they're the only ones who can do my HARP Refinance. Is that true?

No, that's not true. Or, at least it shouldn't be. There are very few instances in which a HARP applicant will be precluded from shopping for the best rate. It's doubtful that your situation is one of them.

My current mortgage is with [YOUR BANK HERE] and I don't like them. Can I work with another bank?

Yes, with HARP, you can work with any participating lender in the country. 

I put down 20% when I bought my home. My home is now underwater. If I refinance with HARP, will I have to pay mortgage insurance now?

No, you won't need to pay mortgage insurance. If your current loan doesn't require PMI, your new loan won't require it, either.

I pay PMI now. Will my PMI payments go up with a new HARP refinance?

No, your private mortgage insurance payments will not increase. However, the "transfer" of your mortgage insurance policy may require an extra step. Remind your lender that you're paying PMI to help the refinance process move more smoothly.

My bank says I can't refinance with HARP 2.0 because I have PMI. Is that true?

No, it's not true. You can refinance via HARP 2.0 even if your current mortgage has private mortgage insurance.

Why does my loan officer tell me I can't refinance with HARP because my current mortgage has PMI?

The new HARP program is exactly that -- new. There are new rules and guidelines and not every bank is up-to-speed on what's going on. If you're hearing that you can't refinance your current mortgage because it has PMI on it, that's a signal that you're working with sub-optimal loan officer. You may want to shop around.

My current mortgage has Lender-Paid Mortgage Insurance (LPMI). Can I refinance via HARP?

Yes, you can refinance your mortgage via HARP 2.0 if your current loan has lender-paid mortgage insurance (LPMI). It's your loan officer's responsibility to make sure that your new mortgage carries, at minimum, the same amount of coverage.

I have no idea what that means. How do I choose my PMI "coverage" when I refinance a HARP loan that has LPMI?

Don't worry about it. Your loan officer will know what to do. Just make sure you disclose that your mortgage has LPMI so the bank knows what to do. Otherwise, your loan could be delayed in processing. 

How do I know if my mortgage has Lender-Paid Mortgage Insurance (LPMI)?

To find out if your mortgage has lender-paid mortgage insurance (LPMI), locate your loan paperwork from closing. There should be a clear disclosure that states that your mortgage features LPMI, and the terms should be clearly labeled for you.

I don't see an LPMI disclosure in my closing package but I think that I have it. How do I know if my mortgage has LPMI?

If there is no LPMI disclosure, first check if your first mortgage's loan-to-value exceeded 80% at the time of closing. If it did, look to see if you are paying monthly mortgage insurance. If you are not paying monthly PMI, you're likely carrying LPMI.

What's the bottom line with HARP refinances and mortgage insurance?

With HARP, regardless of whether you have borrower-paid mortgage insurance (BPMI) or lender-paid mortgage insurance (LPMI), a refinance is possible. The key is that the new loan has mortgage insurance coverage at least equal to the mortgage insurance coverage on your current mortgage.

What if my lender won't give me a HARP refinance because I have mortgage insurance?

If your lender tells you that you can't have a HARP 2.0 loan because you have mortgage insurance, find a new lender. There are plenty that of banks that can -- and want to -- help you. 

What's the biggest mortgage I can get with a HARP refinance?

HARP refinances are limited to your area's conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $625,500.  You can lookup your area's conforming loan limits by clicking here.

Can I do a cash-out refinances with HARP?

No, the HARP mortgage program doesn't allow cash out refinance. Only rate-and-term refinances are allowable.

Can I refinance a second/vacation home with HARP?

Yes, you can refinance an second/vacation property with HARP, even if the home was once your primary residence. The loan must meet typical program eligibility standards.

Can I refinance an investment/rental property with HARP?

Yes, you can refinance an investment/rental property with HARP, even if the home was once your primary residence. You can refinance a home on which you're an "accidental landlord" via HARP. The loan must meet typical program eligibility standards.

I rent out my old home. Is it HARP-eligible even though it's an investment property now?

Yes, you can use the HARP Refinance program for your former residence -- even if there's a renter there now.

How long do I have to stay in my house if I use HARP on my primary residence?

There is no specific timeframe for which you're required to stay in your home if you use HARP 2.0. Just like any other mortgage, if you plan to stay in your home post-closing, it's your primary residence. If you plan to turn it into a rental, it's an investment property. 

These things I'm reading here... Why, when I call my bank, do they tell me it's not true?

It's possible that the call center representative to whom you're speaking is neither knowledgeable about HARP, nor the actual mortgage underwriting process. This post is researched and cross-referenced against Fannie Mae and Freddie Mac guidelines, and publicly-available reports from the FHFA.

Are condominiums eligible for HARP refinancing?

Yes, condominiums can be financed on the HARP refinance program. Warrantability standards still apply.

Can I consolidate mortgages with a HARP refinance?

No, you cannot consolidate multiple mortgages with the HARP refinance program. It's for first liens only. All subordinate/junior liens must be resubordinated to the new first mortgage.

What happens to my second mortgage when I refinance my first mortgage using HARP 2.0?

HARP 2.0 is meant for first liens only. Second liens are meant to subordinate. You'll get to replace your first mortgage and your second mortgage will remain as-is. Just be sure to mention your second mortgage at the time of application so your lender knows to order the subordination for you.

My second mortgage isn't backed by Fannie Mae or Freddie Mac. Is that a problem?

No, it doesn't matter if your second mortgage isn't backed by Fannie Mae or Freddie Mac. Second mortgages are ignored as part of HARP. They can't be refinanced, and they can't be consolidated. Second mortgages are a non-factor in HARP 2.0.

My bank is not setup for HARP and I want to refinance. What do I do?

If your current bank is not setup for HARP, find a new lender. HARP is available through any participating bank (and there are a lot of them). 

Can I "roll up" my closing costs with a HARP refinance?

Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash.  In no cases may loan sizes exceed the local conforming loan limits, however.

I am unemployed and without income. Am I HARP-eligible?

Yes, you do not need to be employed to use the HARP mortgage program. HARP applicants do not need to be "requalified" unless their new principal + interest payment increases by more than 20%. If the new payment increases by less than 20%, or falls, there is no requalification necessary.

What is the maximum income that a HARP applicant is allowed?

The HARP refinance program has no maximum income limits. You cannot "earn too much" to qualify. 

So, I can't earn too much money to use HARP 2.0?

No, there are no income restrictions for the Home Affordable Refinance Program (HARP). A similar-sounding program, though -- Home Affordable Modification Program (HAMP) does have income limitations. Many people confuse the two.

Is HARP the same thing as HAMP?

No. HARP stands for Home Affordable Refinance Program. HAMP stands for Home Affordable Modification Program. Both programs are supported by the Making Home Affordable initiative, but that's about where the similarities end.

I am now divorced. I want to remove my ex-spouse from the mortgage. Can I do that with HARP?

Yes. With HARP, a borrower on the mortgage can be removed via a HARP refinance so long as that person is also removed from the deed; and has no ownership interest in the home. 

Do HARP refinances use Loan-Level Pricing Adjustments (LLPAs)?

Yes, HARP mortgages use loan-level pricing adjustments, but LLPAs are dramatically reduced on a HARP refinance and, in some cases, waived entirely. For example, there are no LLPAs for fixed-rare HARP refinances with terms of 20 years or fewer. For all other loans, loan-level pricing adjustments are capped at 0.75 points.

Does a HARP Refinances require LLPAs for a 15-year fixed rate mortgage?

No, there are no LLPAs for 15-year fixed rate mortgage via the HARP Refinance program.

Is there a minimum credit score to use the HARP program?

No, there is no minimum credit score requirement with the HARP mortgage program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

Do I have to refinance my mortgage with my current lender?

No, you can do a HARP refinance with any participating lender you want. 

My current lender tells me that if I want to do a HARP refinance, I have to go through him. Is that true?

No, it's not true that you can't shop for the lowest HARP refinance rates available. You are allowed to do a HARP refinance with any HARP-participating lender.

My bank called me for a HARP refinance. The rate seems high. Should I shop around?

Yes, it's always a good idea to shop for the best combination of mortgage rates and loan fees. However, be sure to shop with reputable lenders that have experience underwriting and approving HARP mortgages. HARP 2.0 is a new refinance program and not many banks have expertise with them. You don't want to have your loan approval fall apart because your lender failed to underwrite to HARP mortgage standards.

Where can I get the lowest rates on HARP loans?

The HARP program is just like any other mortgage -- you'll want to shop around for the best rates and service. However, because HARP is a "specialty loan", you may want to limit your shopping with reputable lenders that know how to specifically handle HARP loans. 

What are the costs to refinance via the HARP program?

Closing costs for HARP refinances should be no different than for any other mortgage. You may pay points, you may pay closing costs, you may pay neither. How your mortgage rate and loan fees are structured is between you and your loan officer. You can even opt for a zero-cost HARP refinance. Ask your loan officer about it.

What does the term "DU Refi Plus" mean?

"DU Refi Plus" is the brand name Fannie Mae assigned to its particular flavor of the HARP mortgage program. "DU" stands for Desktop Underwriter. It's a software program that simulates mortgage underwriting. "Refi Plus" is a gimmicky-sounding term that could have been anything. The name has been trademarked, however.

What does the term "Relief Refinance" mean?

"Relief Refinance" is the Freddie Mac equivalent of DU Refi+.

For how long should I lock my mortgage rate via the HARP Program

Lock for 45 days, at minimum. This is because the HARP mortgage program, while streamlined for simplicity, still has some grey areas that can lead to delay. It's better to have a rate lock that lasts too long than not long enough.

When does the HARP program end?

If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014 --days from now.

How do I apply for the HARP program?

Use this form to get a rate quote. If the rate looks good, you can accept it. There is no fee for applying.

Apply For HARP 2.0 (Home Affordable Refinance Program)

When you're ready to see mortgage rates, click here for a free HARP rate quote.

Lastly, don't forget! The Home Affordable Refinance Program is not meant to save a home from foreclosure. It's meant to give underwater homeowners a chance to refinance without paying PMI. If you need foreclosure help, call your current loan servicer immediately.