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Lower Rates Could Be Coming!

by Mark Rieger, Duke Warner Realty

Hello Everyone 

Announced yesterday, this action is likely going to drive mortgage rates down further. We can only hope though that the current lender regulations in place lighten up a bit along with the lower interest rates so more people can actually qualify for a loan, Buy a home, and get the housing market going again. Happy New Year to all!! Let me know if you have any questions or need my assistance.

Fed aims to Buy $500 Billion in MBS (Mortgage Backed Securities) by mid-year

Tuesday, December 30, 2008 3:53:48 PM (GMT-08:00)

Provided by: Reuters News

By Mark Felsenthal

WASHINGTON, Dec 30 (Reuters) - The U.S. Federal Reserve on Tuesday moved forward aggressively with an effort to drive down mortgage costs, setting a goal of buying $500 billion in mortgage-backed securities by mid-2009.

The central bank said it would start buying the securities in early January under a program announced last month. When it announced the program, mortgage rates dropped in anticipation of the purchases. Still, some analysts on Tuesday expressed surprise with how vigorously the Fed was pledging to act and the news propped up prices for MBS in very thin trade. "When they are buying along the lines of $80 billion to $100 billion a month, if they're going to do it in six months, they have to Buy everything they can get their hands on," said Kevin Cavin, a mortgage strategist at FTN Financial in Chicago. "It will push up prices and tighten spreads and push down primary mortgage rates," he said. The Fed selected investment managers BlackRock Inc, Goldman Sachs Asset Management, PIMCO, and Wellington Management Co to implement the program.

The mortgage-buying program is part of a sustained government effort to help the United States withstand a severe credit crunch and deep housing downturn that have tipped the economy into recession and damaged activity around the globe.

Earlier this month, the Fed cut benchmark U.S. interest rates close to zero and signaled that it was turning more heavily to unconventional measures to spur the economy.

On Tuesday, it said it would increase the money supply to make the MBS purchases, effectively easing monetary policy further. The program only covers securities issued by government-sponsored mortgage enterprises Fannie Mae and Freddie Mac and government loan financer Ginnie Mae.

When it announced the program on Nov. 25, the Fed also said it would Buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and after its meeting on interest rates on Dec. 15-16 it said it could press even more heavily into mortgage markets. "The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in the financial markets generally," the Fed said in a statement on Tuesday. The central bank said it would adjust the pace of its purchases based on changing market conditions and the impact of the program. The initiative is aimed at reducing the cost of credit and increasing its availability, which authorities hope will support housing markets and foster improved financial conditions generally. Investment managers are needed because of the size and complexity of the program, the Fed said.

Investor appetite for debt issued by Fannie Mae and Freddie Mac had dried up since the government seized control of both companies in September.

FHA's Pre-foreclosure Sale Program

by Mark Rieger, Duke Warner Realty

Greetings,

If you have clients that currently have an FHA loan and are likely to default or have defaulted on their loan and must Sell their home, you and they need to know about FHA’s PFS program. Here’s the HUD link to the full Mortgagee Letter, and excerpts are below.

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/  

December 24, 2008                                                                Mortgagee Letter 2008-43

TO:                             ALL HUD-APPROVED MORTGAGEES 

ATTENTION:            Single Family Servicing Managers

SUBJECT:                             Pre-Foreclosure Sale (PFS) Program - Utilizing the PFS Loss Mitigation Option to Assist Families Facing Foreclosure

High foreclosure rates continue to have devastating effects on families and neighborhoods. The Federal Housing Administration (FHA) remains committed to taking actions to help families avoid foreclosure.  Since being introduced as a national program in 1994[1], the PFS Program has helped thousands of mortgagors in default to avoid foreclosure and transition to more affordable housing. The PFS Program can help many families who today are facing foreclosure.  The PFS loss mitigation option allows a mortgagor in default to Sell his or her home and use the sale proceeds in satisfaction of the mortgage debt when the proceeds are less than the amount owed. 

This Mortgagee Letter (ML) serves to remind mortgagees of the relief that the PFS Program can bring to borrowers with FHA-insured mortgages. To facilitate greater use of this program, FHA has consolidated in this ML the requirements of the PFS Program that have been issued over the years, and has updated and clarified those requirements where needed, to better address the problems faced by mortgagors today and provide greater flexibility in considering a mortgagor’s candidacy for participation in this program.

Pre-Foreclosure Sale Introduction

The Pre-Foreclosure Sale (PFS) option allows mortgagors in default (resulting from an adverse and unavoidable financial situation) to Sell their home at FMV and use the sale proceeds to satisfy the mortgage debt even if the proceeds are less than the amount owed.  This option is appropriate for mortgagors whose financial situation requires that they Sell their home, but they are unable to do so without FHA relief because the gross recovery on the sale of their property (i.e., sales price minus sales expenses) is less than the amount owed on the mortgage.  HUD’s home retention alternatives such as Special Forbearance, Mortgage Modification, or Partial Claim must first be considered and determined unlikely to succeed due to the mortgagor’s financial situation.  Mortgagees must maintain supporting documentation to demonstrate that a comprehensive review of the mortgagor’s financial records was completed, and that the mortgagor did not have sufficient income to sustain the mortgage.  Under no circumstances shall the PFS option be made available to mortgagors who have abandoned their mortgage obligation despite their continued ability to pay. 

To participate in the program, mortgagors must be willing to make a commitment to actively market their property for a period of 3 months, during which time the mortgagee delays foreclosure action.  Mortgagors who successfully Sell to a third party within the required time may receive a cash consideration of up to $1,000.  Mortgagees also receive a $1,000 incentive for successfully avoiding the foreclosure and complying with all the requirements of this ML.  If the property does not sell, mortgagors are encouraged to use the deed-in-lieu of foreclosure (DIL) option, providing the title on the property is marketable.  By following procedures and time frames included in this ML, a mortgagee may submit a FHA insurance claim and be compensated for the difference between the sale proceeds and the amount owed on the mortgage (including accrued interest and reimbursable costs). 

A PFS sale must be an outright sale of the property.  If a foreclosure occurs after the mortgagor unsuccessfully participated in the PFS process in good faith, neither the mortgagee nor HUD will pursue the mortgagor for a deficiency judgment. 

If you have any questions, please give me a call today.

US Treasury may use Fannie, Freddie to help home prices

by Mark Rieger, Duke Warner Realty

Greetings,

This could be a significant stimulus to the housing market. I will provide information as it becomes available…stay tuned!

 

US Treasury may use Fannie, Freddie to help home prices

Wed Dec 3, 2008 4:31pm EST

NEW YORK, Dec 3 (Reuters) - The U.S. Treasury Department is considering a plan to halt sliding home prices by lowering mortgage rates through home-finance powerhouses Fannie Mae (FNM.P: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.P: Quote, Profile, Research, Stock Buzz), the Wall Street Journal reported on Wednesday.

Citing unnamed people familiar with the matter, the Journal said in an online report that the still-developing plan would aim to bring mortgage rates down to as low as 4.5 percent -- roughly one percentage point lower than their current level.

Under the plan, Treasury would Buy securities underpinning loans guaranteed by the mortgage finance enterprises, and those guaranteed by the Federal Housing Administration, an arm of the Department of Housing and Urban Development, the report said. (Editing by James Dalgleish)

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