Posts Tagged ‘Freddie Mac’

January 3, 2014
Mortgage Market News for the week of Jan. 3, 2014
Compliments of:
Patrick Gardner
Mortgage Loan Officer
NMLS ID: 378888
Email me
Visit my website

The economic data released this week reflected continued improvement in the economy, but there was little market reaction. While some volatility was seen during the final days of 2013, mortgage rates ended the week with little net change.

Heading into the new year, recent economic data has provided many reasons to be optimistic about the performance of the economy. The US has added an average of nearly 200K jobs over the past three months, and the Unemployment Rate has declined to 7.0%, the lowest level since November 2008. The ISM national manufacturing index held near the highest level since April 2011. Consumer Sentiment jumped to the highest level since July. Finally, Housing Starts were 30% higher than one year ago, at the highest level since February 2008. The Fed’s recent decision to taper its bond purchases reflects its confidence in the sustainability of the economic recovery.

Mel Watt is scheduled to be sworn in on January 6 as the new Director of the Federal Housing Finance Agency (FHFA). The FHFA is the agency that oversees the operations of Fannie Mae and Freddie Mac. Since a large percentage of mortgage loans made today are eventually sold to or insured by Fannie Mae and Freddie Mac, Watt will have a very significant influence over mortgage lending. Watt has not made public much of what he will do differently from outgoing Acting Director Edward DeMarco, but his policies are expected to be more accommodating to housing finance. Watt has stated that he will delay the recently announced guarantee fee increases that Fannie Mae and Freddie Mac had planned to begin charging in March.

November Pending Home Sales increased slightly from October
Construction Spending rose to the highest level since March 2009
2013 was the best year for the Dow stock index since 1995
The Treasury will auction $64 billion in 3-yr, 10-yr, and 30-yr securities

The important monthly Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Services and Factory Orders will come out on Monday. The Trade Balance will be released on Tuesday. The Minutes from the December 18 Fed Meeting will be released on Wednesday. These detailed Minutes provide additional insight into the debate between Fed officials, and it will be interesting to see the degree of support behind the decision to taper. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.


December 13, 2013
Mortgage Market News for the week of Dec. 13, 2013
Compliments of:
Patrick Gardner
Mortgage Loan Officer
NMLS ID: 378888
Email me
Visit my website

Stronger than expected economic data and progress on a budget deal in Congress caused investors to move forward their expected timing for the Fed to begin to scale back its bond purchases. This hurt both stocks and bonds, and mortgage rates ended the week a little higher.

Fed officials have revealed several conditions which will help them determine when to reduce their bond purchases. Recent economic events and comments from Fed officials suggest that those conditions may have been met. The performance of the economy may be sufficient to make Fed officials comfortable reducing the level of monetary stimulus. A broad range of recent economic reports revealed gains in the labor market, GDP growth, Retail Sales, and manufacturing. In addition, Congress moved closer this week to reaching a two-year budget deal. The proposed deal would reduce the level of uncertainty about fiscal policy, which is another concern of Fed officials. As a result, investors expect the Fed to announce in the near future that it will begin to taper its bond purchases, and some think that it may take place as soon as next Wednesday’s Fed meeting.

Congressman Mel Watt was confirmed this week as Director of the FHFA. The FHFA is the conservator over Fannie Mae and Freddie Mac and as such has tremendous influence over much of the mortgage market. Director Watt takes over from Acting Director Edward DeMarco whose last act was to raise the fee Fannie Mae and Freddie Mac charge borrowers to guarantee loans. Unless reversed by Watt, the fee increase will be effective beginning early next year and will result in an increase in most mortgage rates of about 0.10%.

Core PCE inflation was just 1.3% higher than one year ago
US household wealth increased to a record high during the third quarter
The Treasury will auction $96 billion in 2-yr, 5-yr, and 7-yr securities next week
Euro zone employment levels held steady during the third quarter

The next Fed meeting will take place on Wednesday. The statement is scheduled to be released at 2:00 et, and a press conference will take place at 2:30 et. Whatever indications Fed officials reveal about the timing of the taper likely will produce a significant reaction. The most closely watched economic data next week will be the inflation indicators and the housing market reports. The Consumer Price Index (CPI), an influential monthly inflation report, will come out on Tuesday. Housing Starts will be released on Wednesday, and Existing Home Sales will come out on Thursday. Industrial Production, Philly Fed, GDP revisions, Empire State, and Productivity will round out a busy week.

How the Government Shutdown will Effect Financing

October 2, 2013

How the Government Shutdown will Effect Financing


Most Government Sponsored Entities like Fannie Mae and Freddie Mac and VA are operating as normal and continue business as usual. FHA is staffed with limited personnel and trying not to delay closings or have their business deterred but I would watch FHA loans and applications very closely(like you weren’t already) to make sure there is no funny business.


The big challenge at the moment for all in the industry is the IRS having its doors closed. On nearly every mortgage loan application borrowers are required to complete the IRS Transcript request form called the 4506-T. This form is sent by the lender to the IRS and they provide the lender with tax transcripts verifying income from tax returns for the previous years requested. This is how the lenders quantify borrowers W-2’s, 1040’s, business income and just about every other possible income from credible tax returns or reported income. The IRS will likely not be processing any 4506-T requests during this shutdown. Depending on the duration of the shutdown, requests may be delayed and there may be a backlog of requests that the IRS will need to process when they do re-open. Additionally the Social Security verifications from the Social Security Administration are not available.


In the meantime, EverBank’s policy for this is if tax returns were prepared by a third party, our Processor and/or Underwriter must independently validate the existence of the third party via an internet search and/or obtain verification of the CPA license. If the returns were prepared by an entity such as H&R Block, the office location should be verified. In general EverBank will not suspend loan closings due to the absence of 4506-T validation, however Underwriters still have the responsibility to conduct proper due diligence of the income documentation provided in loan files. Any red flags need to be addressed as thoroughly as possible without the assistance of the tax return transcripts at this time. Significant red flags in a loan file that cannot be addressed or cleared may warrant postponing a closing until a tax return transcript can be obtained from the IRS.


In general lenders are hopeful mortgage loans will not be delayed and optimistic the shutdown will not last more than a few weeks. Origination companies, correspondent banks, and warehouse lenders may react differently as they access the risks associated with an extended shutdown. If it does last more than a month we may be in for some rocky times on the mortgage side, for now let’s go with business as usual and be mindful when entering contract with an FHA buyer.


Hope this information is helpful and re-assuring.

Thanks, Patrick


Patrick Gardner
Mortgage Loan Officer
Office: 415.423.1424
Cell:  510.599.8499
Fax: 415.477.2146
NMLS ID: 378888

30-Year Mortgage Below 4 Percent For First Time Ever

October 6, 2011

By DEREK KRAVITZ, AP Real Estate Writer
Thursday, October 6, 2011

(10-06) 09:46 PDT WASHINGTON, (AP) —

The average rate on the 30-year fixed mortgage this week fell below 4 percent for the first time ever, to 3.94 percent.

For those who can qualify, it’s an extraordinary opportunity to buy or refinance. And mortgage rates could fall even further now that the Federal Reserve plans to reshuffle its portfolio of securities to try and lower long-term rates.

On Thursday, Freddie Mac said the rate on the 30-year fixed mortgage dropped from 4.01 percent last week, the previous low. The average rate on a 15-year fixed loan, a popular refinancing option, dipped to 3.26 percent, also a record. The 15-year loan has fallen for six straight weeks.

Mortgage rates are now lower than they were in the early 1950s, when the average rate reached 4.08 percent for a few months, according to the National Bureau of Economic Research. Back then, mortgages typically lasted just 20 or 25 years.

Still, rates have been below 5 percent for all but two weeks in the past year and that has done little to boost home sales. This year is shaping up to be among the worst for sales of previously occupied homes in 14 years.

“Interest rates are obviously not an impediment to housing. It’s uncertainty about the economy, about jobs, about incomes,” said Mark Vitner, senior economist at Wells Fargo. “It’s not a question of affordability. It’s simply a lack of wherewithal to buy a home or a lack of confidence to commit to buying one.”

Many people are reluctant to take the risk in this market. High unemployment, scant pay raises and heavy debt loads are deterring many would-be buyers.

Others can’t qualify for the historically low rates. Banks are insisting on higher credit scores. And many want first-time buyers to put down 20 percent. Few people have that much cash or home equity to satisfy the requirement.

“Considering how far mortgage rates have fallen, we’d expect to see more people refinancing and buying,” said Celia Chen, director of housing economics at Moody’s Analytics. “It’s still the lack of jobs and the difficult credit environment that’s pushing most people away.”

Total mortgage applications fell more than 4 percent this week from the previous week, according to the Mortgage Bankers Association. Refinancing applications declined more than 5 percent.

Mike Fratantoni, the group’s vice president of research and economics, said potential borrowers “largely remained on the sidelines” and were “unimpressed” by the lowest rates in decades.

Mortgage rates have tumbled because they tend to track the yield on the 10-year Treasury note. The yield has fallen in recent weeks, largely because investors are worried about the U.S. economy and the debt crisis in Europe. So they have shifted their money out of stocks and into the safety of Treasurys.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate being offered in January 2010. Refinancing the loan at 3.94 percent could save him or her more than $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced. Until recently, any rate below 5 percent was considered extraordinarily low. Just five years ago, the best rate for a 30-year fixed loan was around 6.5 percent; a decade ago, it was near 8 percent.

Most economists say rates would need to fall at least a full percentage point before it makes sense to refinance again. The reason is homeowners typically pay a few thousand dollars in closing costs when they refinance. And the low rates being offered don’t include extra fees, known as points, which many borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year and 15-year rose to 0.8. The average fees for both the five-year and one-year adjustable-rate loans were 0.6 and 0.5, respectively.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 2.96 percent. The average for the one-year adjustable-rate mortgage ticked up to 2.95 percent.

AP Business Writer Dan Wagner contributed to this report.

Read more:


California REALTORS® Applaud New Law on Short Sales

July 27, 2011

By Leslie Berkman

RISMEDIA, July 26, 2011—(MCT)—Under a new state law, any lender who agrees to a short sale—which by definition will yield insufficient funds to cover the outstanding loans on a property—must accept it as payment in full for all loan balances. That is a good thing for upside-down homeowners who need to sell, says the California Association of REALTORS®.

In a prepared statement applauding Gov. Jerry Brown for signing SB 458 into law, the association observed that previously a first mortgage holder could accept an agreed-upon short sale payment as full payment for the first mortgage but a junior lien holder could still hound the seller for the full amount owned on the junior lien.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” says association President Beth L. Peerce.

“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders—those in first position and in junior positions—will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” she adds.

Those shopping for a home in the $500,000 to $1 million price range should not tarry. That is because they will probably face higher interest rates and more strict underwriting standards and will need to make a larger down payment later this year when conforming loan limits increase, cautions California Association of REALTORS® President Beth L. Peerce.

“Would-be buyers on the fence need to act well before Sept. 30, when the conforming loan limit is set to be lowered, to avoid a higher cost of homeownership,” Peerce said in a prepared statement.

Lowering the limits on mortgages eligible for purchase by Fannie Mae and Freddie Mac could have a broader impact than on individual homebuyers, says Peerce. “As the housing market tries to gain a more solid footing, the decrease in conforming loan limits that is scheduled for later this year could adversely affect the market,” she says.

Copyright (c) 2011, The Press-Enterprise, Riverside, Calif.