Tag Archives: Federal Reserve

Fixed mortgage rates fell to all-time record lows this week following the Federal Reserve's announcement of ""Operation Twist."" Data released by Freddie Mac Thursday puts the average 30-year fixed-rate mortgage at 4.01 percent for the week ending September 29, and the 15-year fixed-rate at 3.28 percent. Interest rates for adjustable-rate mortgages (ARMs), however, were virtually unchanged. The 5-year ARM averaged 3.02 percent and the 1-year ARM came in at 2.83 percent.

Mortgage lending has declined sharply in neighborhoods with high levels of foreclosures, according to the Federal Reserve. The U.S. central bank looked at what the Neighborhood Stabilization Program (NSP) identified as ""highly distressed"" census tracts. Based on information gathered under the Home Mortgage Disclosure Act (HDMA), the Fed found that home-purchase lending in these highly distressed tracts was 75 percent lower in 2010 than it had been in these same tracts in 2005, and primarily reflects tighter credit for higher-income borrowers.

Interest rates on home loans offered up a mixed bag of results this week. Freddie Mac says fixed-rate mortgages showed no change or dipped slightly and adjustable-rate mortgages ticked upward. Even with the inconsistencies, rates remain near their record lows. Those lows may drop farther with the Federal Reserve's announcement Wednesday that it's planning a new buying spree of mortgage-backed securities and Treasuries. Leading indicators in the bond market since the Fed's statement suggest mortgage rates will again start falling.

Driving home its rationale for new stimulus measures, the Federal Reserve on Wednesday reiterated the pains many Americans are living with every day - economic growth remains slow, unemployment remains elevated, and housing remains depressed. With these and other downside risks holding back recovery, the Federal Reserve says it will begin reinvesting its money into mortgage-backed securities issued by Fannie Mae and Freddie Mac, and it will purchase another $400 billion in Treasury bonds.

The Consumer Financial Protection Bureau (CFPB) is working alongside other federal agencies to create ""common-sense national servicing standards,"" according to the Treasury's advisor on the bureau Raj Date. One of the issues Date plans to address through national servicing standards is what he says has been a lack of incentive for originators and others involved in the front end of the lending process to ensure a borrower has the ability to repay their loan.

Nonprofits across the country are partnering up with lenders and government agencies to minimize neighborhood blight caused by vacant foreclosed properties. The topic was part of the curriculum at the Five Star Default Servicing Conference and Expo, and the panelists found themselves speaking to a full house. Paul Kaboth with the Federal Reserve Bank of Cleveland started the discussion by stressing that a marketplace strained with high levels of REOs and vacancies will persist for at least another five years.

The Federal Reserve has published a new rendition of its market-gauging Beige Book, which indicates economic activity across the country is expanding at only a modest pace. Residential real estate markets were described as ""weak"" overall, however, a few districts did report slight improvements. Markets in the New York district are seeing an increasing share of foreign buyers paying cash. Florida contacts report a rise in sales activity but a decline in bank-owned homes.

Two economists from the Federal Reserve Bank of New York suggest states may be able to help stabilize the housing market by making bridge loans to temporarily unemployed homeowners who struggle to make their monthly mortgage payments. James Orr and Joseph Tracy base their recommendations on a successful Pennsylvania program started in 1982 -- the Homeowners' Emergency Mortgage Assistance Program (HEMAP). In fact, 80 percent of HEMAP borrowers have been able to retain their homes and have repaid their loans.

The marketplace was zeroed in on Ben Bernanke and Jackson Hole, Wyoming, in hopes of a signal from the Federal Reserve's chief that new stimulus measures were in the works to rekindle the stalled economy. But there was no mention of new action. Housing was the black eye of the Fed chairman's speech. He said this recession was ""unusual"" because it was linked to a very deep slump in the housing market, and with an overhang of distressed properties and still-declining home prices, the housing sector is hindering economic growth.

The Federal Reserve found a small increase in consumers' willingness to borrow and banks' willingness to lend, but a decline in loan balances, according to the second-quarter household debt report issued Monday by the central bank's New York arm. Mortgage debt and home equity lines of credit each decreased by about $20 billion during the second quarter of 2011. This represents a 0.2 percent drop for mortgage balances and a 3 percent drop for home equity loans.