CNBC gets it...

Nice work by Diana Olick at cnbc.com. She really summarizes what is happening today in the mortgage market and what it means to those looking to lock in a low rate.

Mortgage Rates: Just How Low Can They Go?
Posted By: Diana Olick

CNBC.com
That’s the question everyone is asking today, as the Fed’s announcement Tuesday that it would buy more mortgage-backed securities sent the Fannie Mae bond prices soaring and the yields in turn plummeting.

Supposedly that’s what lenders look to in setting interest rates on the 30-year fixed. After the announcement, that rate repriced to around 5 percent. It had already dropped quite a bit after the Fed made its initial Fannie and Freddie MBS purchase plan announcement a few weeks ago.
Mortgage brokers I talked to this morning said the floodgates are open, and it’s mostly refis. In fact, the Mortgage Bankers Association’s weekly applications survey showed that last week, with rates historically low, 77 percent of applications were for refis, not new purchases. One broker I spoke with said he’s got so many refi clients that he’s having a hard time finding the time to speak to potential new home purchase clients, because that takes far longer than current clients who already know him and just want him to lock in a rate.

But another broker cautions, when we’re talking about these low low rates for the 30-year fixed, and this morning it was around 4.875 percent, it’s with no points, and the borrower must have a 740+ FICO score, not to mention at least 20 percent to put down on the home. If it’s a refi, especially cash-out, they want to see at the very highest a 75% loan-to-value ratio. And this is only for old-fashioned $417,000 conforming loans.

No, I didn’t forget about the new conforming loan limit of $625,000 in certain high-end markets, as set by the Housing and Economic Recovery Act last summer. Trouble is that the interest rates on those puppies are a bit higher, not as high as jumbos mind you, but higher than you might thing.

And one more item the brokers are telling me: If a major bank drops its rates in a major way and then gets inundated with applications, it likely won’t be able to handle the onslaught and will be forced to raise rates a tad just to slow the tidal wave. Of course, if they don’t get the kind of response for which they had hoped, they might drop rates even lower. Seriously, stay tuned.

Joe six pack is refinancing....and not spending?

Our friends at the AP had a story on MSNBC about people who refi, gets cash out, and don't spend it! How un-American...don't those folks know that it is their duty to go out and buy something? Didn't W tell us after 9/11 that we needed to go out and shop?? It seems that those 20 or so Americans that still have some equity left in their homes have decided to refi, take the cash, and oh my, pay their bills, go to grad school, or even, get ready for this, save their money! Granted, the economy could benefit from a little consumer spending right about now, but if people would have been doing these things all along, we wouldn't be in the jam that we are in now.

APArticle on MSNBC....People are keeping their cash!

Give 'em a break, and watch what happens

Bloomberg reported today that the majority of homeowners who receive a mortgage modification end up in trouble again in a very short time frame. The article does not address this, but my guess is that many of these folks are loosing their jobs or they are having their hours cut, and they are not able to make their payments. Another possibility is that the value of their home continues to decline, so they just decide that it is not worth keeping.

Bloomberg atricle : Majority of Modifications Fail Again

Thurday AM Mortgage Update

Good morning. Today's headlines are all about a surge in mortgage refinance applications. While this news makes for good headlines, one needs to dig a little deeper to find that the pull through rate (the number of applications that actually become new mortgages) is about 50%. Many of those looking to get a new mortgage don't have the income, credit or equity to qualify. The WSJ article mentions that Fannie and Freddie have programs that allow for the mortgage to be 120% of the value of the house. If that is that case, none of the lenders that we do business with are offering the program to mortgage brokers.

Generally speaking, it takes about a 1% reduction in rate for a refi to make sence. Larger loans don't need quite as big of a reduction...however because rates are only dropping for coforming loan amounts, those with jumbo mortgages are out of luck until credit begins to thaw.

Wall Sreeet Journal article on refi surge

New York Times article on surge in new mortgage applications

Can't these guys just get a plan....

The WSJ reports that Treasury is looking to lower mortgage rates to 4.5%. Now if you were getting ready to close on a new home, don't you suppose you might want to tap the breaks just a bit to take advantage of the lower rates....

WSJ Article: Treasury Considers Plan to Lower Rates

1st post on the MortgageMontage Blog

Hello and welcome. My name is Rich Bouchner, and this my mortgage blog. I am one of the principals of Commodore Mortgage Group, a mortgage firm that I helped found in 2003. CMG is currently doing business in 8 states and has originated tens of millions of mortgages.

My goal with this blog is to help demystify the mortgage process for the average Joe. Most people will only mortgage a home a couple of times in their life, and as such, they really do not have a solid understanding of the process. I hope to offer a bit of in-site into the mortgage process, the various mortgage products that are available, and how mortgages, real estate, Wall Street and the global economy are all inter-dependent.