Positive News on Interest Rates and Existing Home Sales

30-year mortgage rates fell to their lowest in 40 years this week with Freddie Mac reporting a .04% drop from last week to 3.91%  15-year mortgage rates remained stable week-to-week at 3.21%, an all-time low.

Good news on interest rates was accompanied by growing signs that the housing market may be set for a turnaround.  The National Association of Realtors reported that sales of existing homes in November were up 4% over the prior month.  Increased sales came in the face of declining inventory with the number of homes on the market in the US at 2.58 million, the fewest since May 2005.

"Falling home prices meeting already low interest rates are driving affordability,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York.“Mix that with higher consumer confidence and job growth, and I can see why home sales appear to be lifting off the bottom.”

Possible Compensation for Homeowners Treated Unfairly in Foreclosure

Major mortgage servicers have agreed to review foreclosure cases that occurred between January 1, 2009 and December 31, 2010 and determine if borrowers suffered financial losses as a result of any of unfair practices. The reviews are part of a larger enforcement action taken against 14 large mortgage servicers last April by the Office of the Comtroller of the Currency ("OCC"), the Federal Reserve and Office of Thrift Supervision ("OTS") in the wake of the "robo-signing" scandal.

As part of that action, the lenders, which include Bank of America (BAC, Fortune 500), Chase (JPM, Fortune 500), Citibank (C, Fortune 500), GMAC Mortgage, HSBC (HBC) Finance, Wachovia, Washington Mutual and Wells Fargo (WFC, Fortune 500), agreed to clean up their foreclosure practices and repay victims.

More than 4 million mortgage borrowers who were foreclosed on between 2009 and 2010 will have a chance to request an independent review of how their foreclosure process was handled, according to Joe Evers, the deputy comptroller for large banks at the Office of the Comptroller of the Currency (OCC).

Should the review find that "financial injury" occurred as a result of an error or other deficiencies in the way the foreclosure process was handled, the homeowner may receive compensation for their losses. However, just how much money the borrower will receive has yet to be determined, said Evers.

"The independent foreclosure review is a significant component of the mortgage servicers' compliance with our enforcement actions," said acting Comptroller of the Currency John Walsh.

When foreclosures flooded the system after the housing bust, many mortgage servicers became more cavalier in the way they handled foreclosures. Affidavits and other documents were signed by low-level employees who had little or no knowledge of what they were attesting to, attorneys hired to manage the foreclosure process were providing inadequate oversight and many bank employees were ignoring requirements to halt foreclosure procedures if loans were in the modification process.

Letters will be sent to borrowers starting Tuesday that will explain how to request case reviews. Foreclosures must have been on primary residences. Borrowers have until April 30, 2012 to request reviews. If you don't receive a letter, but think you may qualify, check for more info at http://independentforeclosurereview.com/

Expanded Refinance Assistance for Underwater Borrowers

Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down.  The Federal Housing Finance Agency (FHFA) announced today that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.  Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013.

More information is available from FHFA at http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf.

Update on Foreclosure Pipeline

A recent report by the leading federal bank regulator, the Office of the Comptroller of the Currency ("OCC") reveals some interesting trends in the 2nd quarter of 2011.  The OCC's mortgage performance report covers about 63 percent of all first-lien mortgages in the United States, worth $5.7 trillion in outstanding balances. 

In a nutshell, foreclosures are continuing to increase, although at a seemingly slower rate as mortgage servicers pursue alternatives to foreclosure.  Unfortunately, nearly half of the loans modified since 2008 have subsequently gone into delinquency.  Looking ahead, the OCC anticipates an increase in REOs coming onto the market as stalled foreclosures work their way through the system.

Here's a look at the numbers:

• Increase in early stage (30-59 days) delinquencies rose by .04% from the previous quarter.  This increase is attributed to the sluggish economy and continued high unemployment, as well as seasonal variations.
• The number of late stage delinquencies (60+ days) also increased slightly in the 2nd quarter after having decreased in each of the previous five quarters.
• Completed foreclosures increased by 1.2% from the previous quarter were up 27% from the quarter prior to that (Q4 2010).
• A brighter note is that newly initiated foreclosures have declined for the past three straight quarters as lenders seek alternatives to foreclosure for delinquent borrowers:
• There were 56,403 new short sales reported during Q2, up 12% from the previous quarter
• Mortgage servicers implemented 456,397 home retention actions, including loan modifications, trial-period plans, and payment plans durign the 2nd quarter of 2011.
• Of loans modified since the beginning of 2008, nearly half – 48.7 percent – have since gone delinquent

What Solar Power Can Mean For Your Home

We all know that having a solar system can help reduce your utility bills, but what does it mean for the value of your home?  According to a recent article posted on Earth911.com, having a solar system can add 3% to 4% to your market value, based on data collected by the National Bureau of Economic Statistics. 

These results are supported by another study by the Department of Energy's Lawrence Berkeley National Laboratory which found that solar panels increased home prices by about $3.90 to $6.40 per watt, which translates to around $17,000 for a 3,100-watt system.

More Approvals for Short Sales

Sales of homes in the process of being foreclosed increased to 12% of total sales of homes in the 2nd quarter of 2011 as banks have increased their approvals of short sales.  RealtyTrac reported both an increase in the number approvals and shorter average time to conclude short sale transactions.  They also noted bigger discounts being approved relative to standard sales, indicating that banks are getting more efficient at clearing inventories.

"This is a glimmer of hope that lenders are getting more realistic," Rick Sharga, senior vice president of RealtyTrac, said in a telephone interview with Bloomberg News. "It's a win for borrowers who avoid foreclosure, buyers who get a house in better condition and banks that lose less money, which is also a win for taxpayers."

Mortgage Rates at 50-Year Low!

The roller coaster stock market is pushing investors into bonds, forcing yeilds down and translating into lower mortgage rates.  Freddie Mac has reported the average rate for a 30-year fixed loan dropped to 4.15 percent in the week ended Thursday from 4.32 percent last week. That was the lowest in more than 50 years. The average 15-year rate fell to 3.36 percent, down from from 3.5 percent

Lower rates aren't doing much to improve the housing market, but have created a boom in refinancing with Mortgage Banker's Association reporting an 8% rise in refinance applications.  The share of refinancings rose to 79% of all mortgage applications.