Mortgage help for 5 states

Five states hit hard by the mortgage crisis will soon share $1.5 billion in federal funds to help the unemployed and the underwater who owe more than their homes are worth.

The Treasury Department on Wednesday approved proposals by Arizona, California, Florida, Michigan and Nevada. The states will use the money primarily to subsidize homeowners’ monthly mortgage payments and to reduce their principal. Some of the funds will also go to paying off second liens or facilitating short sales.

Mortgage applications in a downward trend

NEW YORK (Reuters) — U.S. mortgage applications fell last week,
reflecting a plunge in demand for home refinancing loans as interest
rates surged to their highest levels since late January, data from an
industry group showed on Wednesday.

The Mortgage Bankers
Association said its seasonally adjusted index of mortgage
applications, which includes both purchase and refinance loans, for the
week ended May 29 decreased 16.2% to 658.7.

Tom Marano, chief
executive of mortgage operations at GMAC, said in an exclusive
interview with Reuters on Tuesday that home loan volume at GMAC is
about 75% lower now than when mortgage rates hit record lows several
months ago.

Should We Be More Optimistic About Housing?

When the stock market broke into the last week, hope was in the air for economic recovery. But a sunny outlook was missing for most of us, wrote New York Times columnist Floyd Norris. Economists, he said, were about the economy: “Having been embarrassed by , there is an understandable hesitation to appear foolishly optimistic again.” Today, the committee of economists who mark the end of recession announced its to mark the end of the downturn. Where does this leave the real-estate market? Are housing analysts also hesitant to express optimism? Most would agree that home prices hit bottom around April or May last year, since then the Case-Shiller index has risen every month through January, writes Robert Shiller in this weekend’s . Cause for optimism? Not for Mr. Shiller. Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast. Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue.


Refinancing dangers according to Sen. Charles Schumer

Sen. Charles Schumer is warning homeowners who are taking advantage of low mortgage rates by home mortgage refinancing that they should beware of predators.The senator says they’re the same predators who pushed subprime loans that contributed to the economic crisis.With mortgage rates at historic lows, hundreds of thousands of homeowners are eligible for refinancing in New York state alone.

The senator says misleading offers include lures such as no down payments or closing costs, limited documentation or low credit scores. But such offers, Schumer says, can come with hidden fees and clauses and floating interest rates that can wipe out any savings from the refinancing and even cost the homeowner more.

FHA Reform Act: What it means for the mortgage sector

By a vote of 406-4, the House on Thursday approved the HR 5074, FHA Reform Act, a bill designed to strengthen the agency’s finances and provide a number of other reforms. One of its main provisions is one allowing the FHA to increase the annual premium it charges borrowers to a maximum of 1.55 percent of the mortgage balance.

What does it mean for us? This bill provides a tighter regulation of FHA-approved lenders. It gives the agency greater authority to investigate lenders with unusually high rates of default and withdraw certification.

The legislation is meant to address problems that emerged in the wake of the subprime mortgage crisis and provide enhanced protections for borrowers against questionable lending practices.

We’ll try to see what developments will occur in the following weeks after this bill is formally ratified.

Interesting bits

Latest from the News

Read the news carefully today. You never know what you're gonna get. For recommended reading materials on mortgages and refinance aspects and how to fix your deeds or just plain news on real estate, check out the new york times online. It's a very good source of information.