Marc's Mortgage Matter's

(This tale is meant for entertainment only, and may or may not reflect the views of the editor.;)
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A (substituting grades for dollars - something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.
It could not be any simpler than that.

The Census Bureau reports that between 2005 and 2011, the proportion of young adults living in their parents' home increased. The percentage of men age 25 to 34 living in the home of their parents rose from 14% in 2005 to 19% in 2011 and from 8% to 10% over the period for women. Realtors and loan originators pay attention to this stuff, as it impacts their advertising and pool of potential clients. Similarly, 59% of men age 18 to 24 and 50% of women that age resided in their parents' home in 2011. (College students living in a dormitory are counted in their parents' home, so they are included in these percentages.) In general, the percent of all households that contain just one person has risen from 13% in 1960 to 28% in 2011.

Pat Condell's latest lecture of truth about out "peace-loving Muslims".

Of course, people use mortgage money not only to buy real estate but also to refinance. The Veterans Administration, as one example, reports in fiscal 2011 that the government guaranteed 357,600 VA loans, including 186,600 purchase money mortgages and 171,000 refinances. Obviously, for these folks, mortgages were not “virtually impossible” to get, they are instead entirely accessible.

The same is true with FHA loans. In fiscal 2011 the government insured 777,521 purchase money mortgages and 420,561 loans to refinance, a total of 1,271,211 FHA loans.

Not everyone got an FHA loan. But roughly four out of five applicants did. There were 1,603,669 FHA mortgage applications in fiscal 2011, meaning 332,458 did not go through. But in any year some portion of all loans applications are declined or withdrawn, often for reasons which have nothing to do with the financing — think of a home with a structural problem or title issue.

And surely the mortgage business is not so bad for mortgage bankers. The Mortgage Bankers Association reports that “independent mortgage banks and subsidiaries made an average profit of $1,263 on each loan they originated in the third quarter of 2011, up from $575 per loan in the second quarter of 2011.”

In addition, said the MBA, “average production volume was $237 million per company (or 1,114 loans per company) in the third quarter of 2011, up from $174 million per company (or 866 loans per company) in the second quarter of 2011.”

You have to ask: If mortgages are “virtually impossible” to get then why have origination profits more than doubled? Why are originations up?

Loan Rates

It’s hardly a tough time to get a mortgage because home prices are about 19.1 percent lower nationwide than in April 2007 and mortgage rates are in the dumper. In recent weeks Freddie Mac has reported that both fixed rate mortgages and ARMs have been at record lows.(More about that below!)

NAR says that as a result of falling home prices and low mortgage rates that affordability is at its highest and best level in years — something that could not happen without the ready availability of FHA, VA and conventional mortgage financing.

For background and more information, see Four Foreclosure Financing Myths on RealtyTrac.com.

However, it's not all bad news.

Thanks to ultra-low interest rates, actual debt service levels -- how much households are actually paying on their debt -- are back to 1994 levels (the red line).

This chart was put together by Calculated Risk based on fresh data from The Fed.

People complain about ZIRP (Zero Interest Rate Policy) a lot, and how it screws over savers, but there are two things to note. One is that rates are ultra-low not just because of policy, but because of actual economy growth and inflation prospects. And the other is that in a nation of debtors, this policy is favorable to most of the public.

GOLLY GEE WOW NEWS FOR THE PEOPLE!

Washington - The average rate on the 30-year fixed mortgage fell to a record 3.91 percent this week, the third time this year that rates have hit new lows.

Freddie Mac said Thursday that the average on the 30-year home loan fell from 3.94 percent the previous week. The 3.91 percent rate is the lowest average for long-term fixed mortgages on records dating to the 1950s

The average on the 15-year fixed mortgage was unchanged this week at 3.21 percent. That’s also a record.

Low rates offer a historic opportunity for those who can afford to buy a home or refinance. But many Americans either can’t take advantage of the rates or have already done so.

Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.

Rates could fall further still. Many economists think the yield on the 10-year Treasury note could creep lower in 2012. Long-term mortgage rates tend to track the 10-year Treasury yield. But this past week it crept higher instead proving nothing is as it seems.

Should the Federal Reserve launch a new program of bond purchases in the coming months to try to help the economy, it could further drive down mortgage rates.

Frank Nothaft, Freddie Mac’s chief economist, has said that despite the super-low loan rates, foreclosures and falling home values have created obstacles for would-be buyers.

So after reading this, many have contacted me and asked can they get 3.91% with only .7 in points. The answer is YES. But you need over 750 credit scores, tons of equity in your home, loads of income, and more than a few bucks in the bank. Bottom line this news bulletin is highly deceptive and irresponsible as most day to day borrowers just do not have the qualifications to reach that lofty level.

Regardless, rates are overall still at its lowest and it definitly pays to inquire if it makes sense for you. Contact me and I'll review your individual situation. I will have access to email on Sunday and Monday 25th and 26th.

The Justice Department announced the largest residential fair-lending settlement in history, saying that BofA had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom. "A department investigation concluded that Countrywide loan officers and brokers charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. Countrywide also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received regular loans, it found." Critics are quick to point out that no one from that company has ever served any time. No comment from me you all know how I feel about that F'ing mess!

With just a week to go in 2012, it's starting to look as though record low interest rates are finally having some positive impact on the housing market. After falling to then-record lows in October, mortgage rates broke new ground last week and barely budged this week. Low mortgage rates firmly in place bodes well for a more positive start for the housing market in 2012 than when we began 2011.

There is little doubt that the economic climate has turned warmer in the fourth quarter of this year than in the third or second. More forward momentum would be a good thing as many challenges are expected to face the economy in 2012. If housing can start to gain some traction, a stronger economy will be an easier thing to construct.

There is only a very thin set of economic data due out next week and the markets will likely be thinly populated as well. Equity markets have been on an upward bent for much of this week, lifting mortgage and interest rates (contrary to news bulletins) on Wednesday and Thursday and keeping them from setting new lows. If that rally continues next week, we could see another basis point or two increase in rates at most; however, with the end of the month looming, some may look to lock in equity profits by selling shares, and this would tend to benefit rates. We call for no change next week.

Couldn't dig up a kosher Chanukah joke so this one will have to do. 

Three men died on Christmas Eve and were met by Saint Peter at the pearly gates.