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.

FHA mortgages are poised to get more expensive

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via: Los Angeles Times/Kenneth R. Harney

The FHA plans to impose limits on the amount of money that home sellers can contribute at closing and to raise mortgage insurance premiums.

If you're considering buying a house with an FHA mortgage and expect the seller to help out with your closing costs, here's a heads-up: The Federal Housing Administration plans to impose significant restrictions on the amount of money that sellers can contribute at closing in the near future.

On top of that, the FHA also will be raising its mortgage insurance premiums during the coming weeks, increasing charges for new purchasers across the board.

You might ask, why hit us with additional financial burdens right now, just as housing is showing modest signs of recovery in many areas and the spring buying season is getting underway?

One big reason: Over the last six years, the FHA has been the turnaround champ of residential real estate, offering down payments as low as 3.5% despite the recession and housing bust and growing its market share to 25%-plus from 3%. The program is financing 40% or more of all new-home purchases in some metropolitan areas and is a crucial resource for first-time buyers and moderate-income families, especially minorities. With a maximum loan amount of $729,750 in high-cost areas, it is also a force in some of the country's most expensive markets — California, Washington, D.C., New York and parts of New England.

But during the same span of rapid growth, the FHA's insurance fund capital reserves have steadily deteriorated — far below congressionally mandated levels. Delinquencies have been increasing. According to the latest quarterly survey by the Mortgage Bankers Assn., FHA delinquencies rose to 12.4%, compared with a 4.1% average for prime (Fannie Mae-Freddie Mac) conventional fixed-rate mortgages and 6.6% for VA loans.

As a result, the FHA is under the gun — with Congress and within the Obama administration — to get its own house in order, cut insurance claims and rebuild its reserves. The upcoming squeezes on seller contributions and bumps in premiums are steps in this direction.

The seller-contribution cutbacks could be painful, particularly in areas of the country where closing costs and home prices are relatively high.

Here's what's involved: Traditionally the FHA has been uniquely generous in allowing home sellers — including builders marketing new construction — to sweeten the pot for purchasers by chipping in money to defray closing costs. The FHA now allows sellers to pay up to 6% of the price of the house toward their buyers' closing expenses. Fannie Mae and Freddie Mac, by comparison, cap contributions at 3%. The VA's ceiling is 4%.

Under newly proposed rules, the FHA cap would drop to the greater of 3% of the home price or $6,000. In sales involving houses priced at $100,000 or less, this wouldn't change anything ($6,000 equals 6% of $100,000). But on all sales above this threshold, the squeeze would get progressively tighter.

On a $200,000 home, a buyer could today ask the seller to pay for $12,000 of a long list of settlement charges including all prepaid loan expenses, discount points on the loan, interest rate buy-downs and upfront FHA insurance premiums, among others. Under the proposed cutback, the maximum amount would be slashed in half.

On many home transactions, the reductions would force sellers to lower their prices to enable cash-short buyers to get through the closing. In other cases, sales might simply be too far of a stretch for some purchasers.

The proposed cuts are open to public comment through the end of this month but are highly likely to be adopted in much the same form soon afterward. The FHA also is restricting the types of "closing costs" that sellers can pay. Six months' or a year's worth of interest payments or homeowner association dues in advance no longer will be permitted — a serious blow to many builders who use these as financial carrots.

Beyond these changes, FHA also plans significant increases in insurance premiums — upfront premiums will rise to 1.75% from 1%, effective April 1, and annual premiums will increase by 0.1% on all loans under $625,000 and 0.35% on mortgage amounts above that, effective June 1.

William McCue, president of McCue Mortgage Co. in New Britain, Conn., which does a sizable percentage of its business with the FHA, said the cumulative effect of all these increases "will not just crowd first-time buyers out of the FHA market, it will prevent them from owning a home that, absent these new costs, would be affordable."

Bottom line: Nail down your FHA money and seller-contribution negotiations as soon as you can because later looks a lot more expensive.

Mortgage Rates Spiking… Just Before HARP 2.0 Goes Live

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via: TheMortgageReports.com/Dan Green

Mortgage rates have moved higher 0.250% this week. If you've been shopping for low mortgage rates on a HARP 2.0 refinance or FHA Streamline Refinance, you've no doubt discovered this the hard way.

The reason why mortgage rates are rising is because of Wall Street's not-so-sudden realization that the U.S. economy may be actually improving.

Mortgage Rates Climbing Quickly

Retail Sales measures total cash receipts for merchandise bought from a brick-and-mortar store, or online. It's a measure of consumer spending, which is believed to comprise roughly 70 percent of the U.S. economy.

In other words, as Retail Sales figures grow, so does the U.S. economy -- an unfortunate consequence for today's mortgage rate shoppers.

Se,, as reported by the Census Bureau, U.S. Retail Sales rose to $335 billion in February, excluding cars and auto parts. The figure marks another all-time high for Retail Sales. It's the 19th time in 20 months that sales receipts climbed.

Furthermore, 11 of 13 retail sectors posted gains in February, suggesting that consumer spending is increasing broadly, and not just in a few remote areas of the economy.

Since the Retail Sales report's release, mortgage rates have zoomed higher.

Of course, everything is relative. FHA mortgage rates and HARP mortgage rates are still cheap. They're just not as cheap as they were in February.

 

No QE3 From The Fed? Higher Rates Ahead.

It was a poor economy brought mortgage rates down. A strengthening one, therefore, will bring mortgage rates up.

Right now, the economy is strengthening.

Not only has consumer spending reached record levels (again), but the jobs market appears to be in bloom. More than 1 million jobs have been created in just the last 5 five months. There remains a net job deficit from 2008, but every month is a step in the right direction.

In addition, manufacturing is rising, business investment is rising, and consumer confidence is rising. All of these items taken separately could be enough to raise mortgage rates. Taken together, they're a force. And then, we consider the Federal Reserve's most recent remarks.

In summary, the Fed sees growth coming faster than originally expected. There's suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low (i.e. QE3).

Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out.

With no stimulus, mortgage rates rise.

You Can't Predict A Bottom. Lock Your Rate Now.

Mortgage rates change all day, every day. You can't know when rates will rise and you can't know when they'll fall -- especially because they're subject to outside influence from the U.S. government.

Related, you can't know when mortgage rates have reached a bottom. You can only know in hindsight. Right now, though, it appears as if mortgage rates have much reason to rise and little reason to fall. All economic signs point to growth and growth takes rates north.

Best thing you can do in your search for low mortgage rates and a great deal is to get mortgage rates quote, and see how they stack up. You're under no obligation when you shop for mortgage rates so make the best of your time.

Mortgage Rates Drop, Discount Points Double Since 2007

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via: TheMortgageReports.com/Dan Green

Mortgage rates have been on a multi-year downward trajectory. Conforming mortgage rates, FHA mortgage rates, jumbo mortgage rates -- everything has dropped As recently as 2006, 30-year fixed rate mortgage rates in the 6-percent range were common.

Today, the best rates 30-year fixed rate mortgage rates are closer to 4.

However, as mortgage rates have dropped, mortgage costs have climbed. It's the start of a trend that should carry forward for the next few years.

 

Freddie Mac's Required Discount Points Have Doubled

Each week, government mortgage-securtizer Freddie Mac publishes its Primary Mortgage Market Survey. The survey gathers "current mortgage rates" from more than 125 U.S. banks, and averages them into a "national mortgage rate".

The survey charts the actual mortgage rate offered by banks, as well as the number of discount points banks require to get access to said rate.

Discount points are "prepaid interest"; upfront fees paid in exchange for lower mortgage rates. The more discount points paid on a given mortgage, the lower its mortgage rate will be.

For example :

• A mortgage rate at 4.250% may have 0.00 discount points
• A mortgage rate at 4.000% may have 0.50 discount points
• A mortgage rate at 3.750% may have 1.25 discount points

There is often no limit of how many discount points you can add to a mortgage, but at some point, it becomes cost-prohibitive. Your loan officer can help you with the math.

 

In terms of costs, 1 discount point is equal to 1 percent of your loan size and is a fee paid up-front, at the time of closing. Discount points can be paid with cash, or added to your loan balance, if that's your preference.

As an example of how the math discount points work, assuming that you live in San Jose, California and your loan requires 2 discount points, if you borrow up to the local conforming loan limit of $625,500, your discount points would increase your closing costs by $12,500.

Since 2007, mortgage rates have fallen by one-third. During the same time, however, the number of discount points required to get Freddie Mac's "published rates" has doubled.

Today's low mortgage rates are still a great deal -- they're just coming at a higher cost than you might remember.

 

The Psychology Of "Low Rates"

There's no big secret why the average number of discount points is rising nationwide. It's a psychology thing. Human Nature and the hunt for the "absolute lowest rate, guaranteed" has helped it happen.

See, as mortgage rates have dropped, and as the internet has become a legitimate place to shop for a loan, the business of mortgage origination has become more democratic. Customers have a plethora of mortgage rate options these days, and no shortage of outlets.

It's a Rate Shopper's World and the lenders are just living in it.

It took some time for banks to learn this but now they know. So, rather than take their customers for granted, banks are taking them for naive instead. Wow the shoppers with a low, low rate -- load up the discount points -- and hope no one knows the difference.

Sadly, it's been a viable strategy.

Freddie Mac's average discount points have been rising since 2007 even as mortgage rates fall. You can get a loan for cheap, but it's going to cost you more than ever before.

Don't Want To Pay Discount Points? Good.

Don't worry about what Freddie Mac says. Paying discount points is optional. Banks can quote you rates that include big discount point payment, but it's up to you whether you want to actually pay them. It many cases, you won't want to because it won't make sense.

For example, if you plan to move or refinance within the next several years, you may find that it's better to waive your discount points for a higher mortgage rate. You may pay an additional 0.250% on your mortgage each year because of a higher interest rate, but you'll eliminate that big up-front cost that may never be recouped.

Know all of your options -- not just your Freddie Mac ones. Remember to get your mortgage rates quotes with and without discount points.

Mortgage Rates And APR : Finding Low Rates And “Great Deals”

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via: TheMortgageReports.com/Dan Green

It's a myth that you can shop for a mortgages using Annual Percentage Rate (APR) calculations. You can't shop for loans by APR. Period.

No matter what your loan type --  FHA, conventional loans, VA, USDA or jumbo -- shopping by APR makes it less likely that you'll choose "the best deal". APR is among the most easily manipulated numbers in the mortgage business and some lenders count on you not knowing that.

What Is "APR"?

More commonly called APR, Annual Percentage Rate is a government-concocted math formula. It's meant to measure the "true cost" of a loan, from the date of closing to the date of payoff.

APR is roughly measured by taking the original loan size, accounting for closing costs and prepaid items, then estimating how much will have to be paid over 30 years to pay off the loan in full.

APR answers the question, "If I borrow this much money, and it costs me this much to pay off my loan, what would my theoretical mortgage rate have been?"

APR is printed in the top-left corner of the Federal Truth-In-Lending Disclosure, as shown above.

Loan officers are required to disclose a mortgage's particular APR every time they make a rate quote. This is federal law, meant for consumer protection. By showing APR along with every rate quote, it's believed that customers will be better informed and can make better loan choices.

In some cases, this is true. In many cases, it is not.

APR is not the "apples-to-apples" comparison tool it's advertised to be. This is because the loan with the lowest APR isn't always the loan that's best for you.

APR Can't Be Your "Apples-To-Apples" Tool

Banks and lenders love to promote their "low APR loans" -- especially online. In fact, most mortgage marketplaces sort loans by APR by default. This means that the loans with the lowest APR will show up first on your list of approved mortgage lenders.

Unfortunately, getting a low APR doesn't translate to getting a "good deal". This is because the APR formula is flawed.

Calculating for APR requires a lender to makes serious assumptions about the future and, as we all know, predicting the future is impossible.

For example, here are three egregious assumptions that the APR formula makes about your loan:

1. The APR formula assumes that you will hold your loan for 30 years
2. The APR formula assumes that you will never make extra principal payments of even $1
3. The APR formula assumes that you will not refinance or sell your home

If any of these statements are "untrue", or have the chance of being untrue, APR fails as a comparison tool.  This is a huge deal when comparing loans with discount points to loans without discount points, and it's one way in which online lenders make their "deals" look great online.

For example, as compared to a loan with no discount points, a loan with discount points will have higher closing costs but lower principal + interest payments each month. Over the life of the loan, the lower payments will render the loan with discount points "cheaper" and so it will have a lower APR than the low-fee mortgage choice.

If you chose your loan strictly by APR, you would end up choosing the loan with the highest closing costs and the best long-term payoff.

This is fine if you plan to stay in your home for 30 years and never make extra payments on your loan. If you plan to sell in fewer than that, though, the APR comparison becomes worthless. In this case, buying by APR is the worst way to shop -- you'll front-load your mortgage with fees.

More Ways In Which APR Is Flawed

Your loan's APR can be affected by other assumptions, too.

First, as we discussed, mortgage loan costs are added to the APR formula but, at the start of a loan, third-party loan costs such as appraisal and title services are sometimes unknown. As a result, your bank may inadvertently understate those fees. When they do, it makes APR appear artificially low.

With estimated fees, in other words, comes an estimated APR.

And, second, on adjustable-rate mortgages, the APR formula make assumptions about how the loan will adjust during its complete, 30-year term. Will mortgage rates rise over 30 years? Will they fall? By how much will they rise or fall?

Two lenders using two different set of assumptions will publish two different APRs -- even if the loans are identical in every other way. The lender whose mortgage rate adjustments are most aggressively-low will present the lowest APR.

This, too, can misdirect a consumer.

Look At Rate-And-Costs When Choosing A Loan

The important thing to remember is that APR is not the metric for comparing mortgages -- it's merely a metric. The better way to compare two mortgage rate offers is to look at the mortgage rates as compared to the fees. APR should have nothing to do with it.

If you're shopping for a mortgage by APR, stop now. Start with a fresh quote for a mortgage rate -- that's the rate at which you're borrowing anyway. Get a rate quote without fee or obligation and shop for rates the right way.

Beige Book Sees Continued Modest Improvement in Economy

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via: DSNews.com/Carrie Bay

Overall economic activity continued to increase at a modest to moderate pace in January and early February, the Federal Reserve said in its periodic Beige Book, an anecdotal report of conditions in each of the 12 Federal Reserve districts.

The report showed economic improvement varying across the country — economic activity rose at a “somewhat faster pace” in the Philadelphia and Atlanta districts but growth was slower in New York. Activity expanded at a “moderate pace” in the Cleveland, Chicago, Kansas City, Dallas, and San Francisco districts and St. Louis noted a modest pace of growth. Minneapolis characterized the pace of growth as firm, the Beige Book summary said, while the Boston and Richmond Districts reported economic activity expanded or improved in most sectors.

The Beige Book report was based on information collected through February 17.

Though followed closely by economists and the media, the Beige Book – issued two weeks in advance of a meeting of the Federal Open Market Committee – is rarely cited in the minutes of the Committee meetings. That said as an “anecdotal” report it often precedes confirming data and is sometimes considered “anecdatal.”

Residential real estate activity, according to the reports, increased “modestly” in most parts of the country. Philadelphia reported “strong” residential sales activity. The Boston, Cleveland, Richmond, Atlanta, Kansas City, and Dallas districts also reported growth in home sales, but without the adjective. New York noted “steady to slightly softer” home sales and home sales declined in St. Louis while San Francisco noted “home demand persisted at low levels.”

That said, the Beige Book reported “contacts’ outlooks on home sales growth were mostly optimistic” with contacts in Boston, Philadelphia, Atlanta, and Dallas expecting home sales to rise further.

Home prices, the report said, declined or held steady in many areas. Cleveland and Atlanta reported little movement in house prices, while contacts in Boston, New York, Philadelphia, Richmond, Chicago, and Kansas City reported some declines.

Single-family residential construction was weak in Chicago and declined in St. Louis; Cleveland reported a year-end uptick seen in construction had slowed although Minneapolis noted increased single-family building permits. Boston, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco reported increased multifamily construction activity.

Reports on banking conditions were generally positive across the country. Lending increased in the New York, Philadelphia, Richmond, Chicago, Dallas, and San Francisco districts but was little changed in St. Louis and Kansas City. Loan demand was described as weak in Richmond and soft at regional banks in Atlanta.

Demand for residential mortgage loans increased in New York and Richmond. Mortgage demand was flat to moderately stronger in St. Louis but “softened” in Kansas City.

Overall, the Beige Book report said, lending standards remained restrictive in San Francisco and Richmond and were largely unchanged in St. Louis and Kansas City. Lending standards tightened further for commercial borrowers in New York. Credit conditions in Chicago improved slightly, while quality improved in Philadelphia and Kansas City. Delinquencies were steady or declined in Cleveland. Mortgage delinquencies were steady in the New York district but delinquencies decreased in other loan categories.

The Beige Book is often cloaked in secrecy. The district reports are sent to one of the banks, which prepares the national summary. The identity of district bank, which prepares the summary is closely guarded. This report was prepared by the St. Louis Federal Reserve Bank, which last wrote the summary in July 2010 when it reported “economic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City districts reported that the level of economic activity generally held steady.” The nation’s economy swooned shortly after that report was issued.

The Federal Open Market Committee is scheduled to meet March 13 to review monetary policy.

Treasury Reinstates HAMP Incentives as Servicers Show Improvement

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via: DSNews.com/Carrie Bay

The Treasury Department says servicers participating in the Home Affordable Modification Program (HAMP) are getting better at evaluating homeowners for the program, including noticeable improvement in assessing borrower income to determine program eligibility and calculate the amount of their modified payments.

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Treasury reported Friday that during the fourth quarter of 2011, seven of the largest participating servicers were found to be in need of “moderate improvement” and two servicers were found to need only “minor improvement” with respect to the specific performance metrics tested. No servicer was found in need of substantial improvement last quarter.

OneWest Bank and Select Portfolio Servicing performed at the highest level, needing only minor improvement. The seven servicers deemed to need moderate improvement include: America Home Mortgage Servicing, Bank of America, CitiMortgage, GMAC Mortgage, JPMorgan Chase, Ocwen, and Wells Fargo.

HAMP performance reviews evaluate servicers based on three categories: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management, and governance.

Treasury singled out JPMorgan and BofA in its latest report, noting that both servicers had improved their practices over the last quarter. Treasury had been withholding HAMP incentive payments from the two companies because prior servicer assessments found them to be in need of “substantial improvement.”

Bank of America was found to have remedied essentially all areas previously identified as needing improvement and continued to demonstrate improved processes generally, Treasury said.

JPMorgan Chase showed marked progress in remedying a number of outstanding issues from previous quarters, according to the report, including improving the speed at which it processes eligible homeowners for permanent HAMP modifications and strengthening its internal quality assurance processes around the program.

Treasury said it agreed to release withheld incentives for past deficiencies as part of the $25 billion federal-state mortgage servicing settlement announced last month, but officials stress that they retain the right to withhold incentives in the future should the results of HAMP compliance reviews warrant such remedial action.

As of the end of January, participating servicers had granted 951,319 permanent HAMP modifications to distressed borrowers. There are an additional 76,343 HAMP trials currently in active status.