Tag Archives: Mortgage Debt

Despite a steady climb in mortgage interest rates since May, borrowers continued to take advantage of low rates to refinance into lower monthly payments, Freddie Mac reported Tuesday. According to the results of the company's latest quarterly refinance analysis, the average interest rate reduction among those who refinanced in Q3 was about 1.8 percentage points, representing a savings of about 30 percent ($3,500 over 12 months on a $200,000 loan).

Over the past few years, lenders and underwriters revamped their standards to reduce risk, but Equifax says there's one challenge many lenders still have difficulty combating--undisclosed debt. In a recent white paper, the credit bureau published results of its research into undisclosed debt and its recommendation for how to deal with this difficult hazard. Ultimately, Equifax said, ""The results are somewhat surprising and disturbing.""

Freddie Mac has priced a $630 million offering of Structured Agency Credit Risk (STACR) debt notes, marking the second STACR offering in which private sources--not taxpayers--take on the credit risk. According to a statement from the GSE, about 50 broadly-diversified investors participated in the offering for the debt notes, which are scheduled to settle November 12.

While many indicators suggest the housing market is recovering, some fear another bubble is already forming. A survey by Country Financial, a financial services firm in Illinois, found that some 48 percent of Americans believe the market could reach ""bubble"" status within the next two years. Bubble or no bubble, many Americans continue to suffer financial burdens that impede them from homeownership.

The National Foreclosure Mitigation Counseling (NFMC) program has provided counseling to almost 1.6 million homeowners across the country since the program started in 2008. According to an NFMC congressional report released this week, common attributes of struggling homeowners include unemployment or underemployment and high mortgage rates. The report also indicates a homeowner who seeks counseling is 97 percent more likely to obtain a loan modification and avoid foreclosure.

The Federal Housing Administration (FHA) will be accepting a bailout of more than $1 billion to make up for losses sustained from the agency's legacy books and its reverse mortgage program. Following reports last week that FHA's financial situation would require a Treasury draw in the neighborhood of the Obama administration's $943 million forecast, Commissioner Carol Galante revealed in a letter to the Senate Banking Committee that the agency is taking an appropriation of approximately $1.7 billion.

Citigroup and Freddie Mac have reached an agreement to settle potential future repurchase claims on millions of loans sold to the GSE in the last decade. According to a release from Citi, the bank will pay Freddie Mac $395 million, all of which is covered by its existing mortgage repurchase reserves as of the end of Q2.

Home prices have rebounded so rapidly that industry data show 8.3 million borrowers who've been underwater are on track to have enough equity to sell their home within the next 15 months--without resorting to a short sale. Metro markets that boast the highest percentage of homes with resurfacing equity include Omaha; Colorado Springs; Tulsa; Little Rock; and Raleigh, North Carolina.

Equifax announced the availability of Equifax Dimensions, a new product created to deliver a more in-depth picture of past credit behavior to predict future trends. Users of the new solution can see up to two years' worth of detailed consumer credit activity, allowing them to identify consumer patterns such as a borrower's financial ""breaking point"" that will lead to default and which consumers are most likely to open new accounts.

Mortgage debt decreased with overall household debt in the second quarter, the Federal Reserve Bank of New York reported Wednesday. Mortgage balances stood at $7.84 trillion in the second quarter, down by $91 billion from the first quarter. The New York Fed report explained the decrease was partly ""due to reporting gaps associated with the servicing transfer of a higher-than-usual number of loans."" Overall consumer debt continued to fall, ending at $11.15 trillion in the second quarter, down by $78 billion, or 0.7 percent, compared to the first quarter.