DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE

When many homeowners signed on for those variable rate mortgages, their goals were to get in the house with the lowest possible interest rate and then refinance before the higher payments took over.  These borrowers often had very low down payments.  In today’s falling market, those homeowners with adjustable rate mortgages are treading dangerous waters.

Surprisingly, 60% of homeowners who are delinquent on their mortgage payments now wish they knew more about their loan.  These borrowers do not fully understand the terms of their loans and the remedies that lenders may be willing to discuss. 

With a wave of adjustable rate mortgages ready to increase interest rates at the end of 2009 and more in 2010, more homeowners will come under pressure.  When the owners assess their situation, they may not like what they see.  In most cases, fair market value is below the mortgage level and refinancing is not an option.  Homeowners who see a potential problem should go to the lender prior to the delinquency.

Many adjustable rate mortgages were packaged together and sold as parts of various funds.  These funds retain service companies to collect and disburse payments.  These service companies are not he owner of the mortgage and usually offer little assistance in attempts to modify loans.

If the homeowner cannot locate the true mortgage owner, HUD can help.  HUD counselors are committed to helping homeowners attempt modifications.  Frustrated owners should call the local HUD office and ask for assistance.

Nearly 1 million residential mortgages will be foreclosed in 2009.  This astounding figure is filled with heartache and tragedy.  In many cases, the best bet is to approach the mortgage holder, explain the dilemma and determine what options are out there.  Banks and borrowers have at least one common interest; neither wants foreclosure.  That is a good place to start working through problems that will arise with adjustable rate mortgages.  

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Today, one out of every 196 homes in the country is faced with defaults and foreclosure. There are very few people who would not be interested in the news related to real estate. It matters to know the state of affairs of the real estate market. Since there are many who are looking to buy homes, rent out space for themselves and the family. Then there are other class of people who want to sell there properties or rent their homes. For both, the buyers and the sellers, it is important to understand the market condition and act accordingly.

The sellers these days aren’t a happy lot. The rapid decline of job opportunities coupled with the job cuts going around hasn’t helped the buyer population. The number of buyers has reduced both for the new homes or resale homes, due to the fear of financial commitments and how the future holds.

There has been a slight improvement in buying trends for the past few months, however. Add to this the fact that many properties have been put under the foreclosure bracket of the banks, which has pulled down the prices of the resale properties, since the banks would sell these properties in an auction. Though the resale numbers have picked up considerably, the value is not coming in.

The buyer still remains cautious owing to the spate of foreclosures – some of the highest numbers in the history. The unemployment rates, which touched 11 percent, is a further set back to many who were thinking about buying a home. Now with a depleting financial situation they would definitely be thinking of a job more than a home. It would also mean that many are moving out of their ownership homes and taking up rented places where the commitment is lower.

There is some help to the buyers in terms of the very attractive mortgage interest rates and tax incentives by the federal government for the first time homeowners. However, significant growth will only happen when the job market improves, leading to stability and more faith from the population at large.

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The Mortgage Bankers Association is a national association that represents persons and corporate entities in the real estate finance industry.  With 280,000 persons spread throughout every community in the U.S. the association provides reputable information about national and regional trends, rates and activity across numerous real estate finance markets.

On September 16, 2009, the organization released its Weekly Mortgage Applications Survey for the week ending September 11, 2009.  Adjustments were made to reflect the Labor Day holiday.  The news continued a recent downward trend. 

The Market Composite Index, which measures mortgage loan application volume, fell 8.6% from the previous week on a seasonally adjusted rate.  On an unadjusted scale, the weekly volume dropped 18.3% and was down 18.7% in year-over-year comparisons.

One aspect of the real estate funding activity that remains strong is the refinance component.  The Refinance Index decreased 7.4% from the previous week but the four-week moving average for refinance applications is up 5.2%.  Borrowers are seeking to renegotiate lower interest rate loans and to capitalize on the federally backed modification loans.

Refinance applications accounted for 61% of all real estate funding activity during the week and marked a 1.2% increase over the previous week.  With real estate values appearing to stabilize and with government initiatives showing strong support for refinancing, refinance activity is significantly busier than last year.

Applications for Adjustable Rate Mortgages (ARM) were also on the rise.  The number of ARM applicants rose from 5.8% to 6.0% of total finance applications processed last week. 

The interest on 30-year fixed rate mortgages with an 80 percent loan to value ratio rose slightly to 5.08%.  Points related to these loans fell to 0.98% from 1.23%.

15-year term loans for fixed rate mortgages decreased to 4.41% from 4.45% the week before.  Points on 15-year fixed rates loans fell to 1.12% from 1.13& previously.  These points include the origination fee.

The weekly survey covers 50 percent of all U.S. retail residential mortgage applications.  The survey has been conducted since 1990.  Participants include mortgage bankers, commercial banks and thrifts.  The base period for all indexes is March 16, 1990.   

The Mortgage Bankers Association (MBA) maintains headquarters in Washington, D.C.  The group is charged with ensuring the continued strength of the nation’s residential and commercial real estate markets.  As such, reports and surveys distributed by the MBA have influence on various markets throughout the financial sector.

One goal of the NMBA is to extend the opportunity of affordable homeownership throughout the nation.  The MBA promotes fair and ethical lending practices.  The association sponsors numerous ongoing educational programs for members and affiliates.  Membership in the MBA includes more than 2,400 companies from all aspects of the real estate finance including mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits and life insurance companies.

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