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In the news, Date: 2nd quarter 2007
- In the March, 2007 survey conducted by GFK Roper, homeowners with mortgages were asked what type of mortgage they had. A stunning 34 percent of the homeowners had no idea.
- Nearly 900 Californians a week are loosing their home to foreclosure. There have been 11,033 foreclosures in the first three months of 2007, representing an 800% increase over the same period last year.
- According to the FBI's "suspicious activities report" related to mortgage fraud, filings have more than doubled in the past two years. In 2006 there were 35,617 filings.
- 43 percent of subprime loans in 2006 didn't require borrowers to fully document their income or assets.
- Over the last three months of 2006, prime delinquency rates nationally grew to 2.6 percent from 2.4 percent, while subprime delinquencies grew to 13.3 percent from 12.6 percent, according to the Mortgage Bankers Association.
- According to the Mortgage Asset Research Institute, Arizona has become a magnet for mortgage fraud moving from 23rd to seventh in the nation.
- Subprime borrowers in the U.S. are falling behind on their payments at the highest rate in four years, according to the bankers' group in a March 13th report.
- Detroit foreclosure ratio leads nation: one out of 21 homes were lost in 2006. Atlanta was second with one out of every 23 homes.
- Predatory lending occurs when complex mortgage terms and interest rate risks were not fully explained as required by federal law. The borrower is usually the victim.
- Most of the loans going into default now were made at the peak of the housing boom in 2005. Nearly 80% of loans made for the purchase of homes during this time were adjustable.
- The "mortgage police" are the Inspectors General's Office at the U.S. Department of Housing and Urban Development. In the past three years, they've conducted 190 audits, brought 1,350 indictments and won 1.3 billion in court-ordered restitution.
- Between the beginning of this year and the summer of 2008, some $650 billion worth of U.S. mortgages face their first payment reset.
- Boston housing activist Bruce Marks said that his organization will provide $1 billion in mortgage refinancing to homeowners nationwide who are struggling with high-cost subprime loans.
- As many as 2.2 million Americans with subprime loans have lost or will lose their homes because of mortgages they cannot afford, according to the Center for Responsible Lending.
- Sen. Linda Higgins is sponsoring a bill that has Congress trying to crack down on deceptive lending practices.
In the News, Date: 1st quarter 2007
- Over One Trillion dollars of loans will face a 25 percent increase in payments this year alone.
- Adjustable Rate Mortgages (ARM) represent nearly one-fourth of all mortgages held.
- Approximately ten million homeowners have ARMs and 7.7 million of these loans are due for a rate change in the next 24 months.
- Realty Trac released its January 2007 U.S. Foreclosure Market Report, which shows that 130,511 new foreclosure fillings were reported during the month of February 2007.
- The U.S. national foreclosure rate is one new foreclosure filling for every 886 U.S. households.
- The National Association of Realtors told a Senate panel that NAR supports stronger lending legislation and more consumer education on nontraditional mortgage products.
- Center for Responsible Lending research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4 percent) subprime loans issued during 2005-2006 will fail.
- Home Mortgage Disclosure Act "Losing Ground" estimates that 8 to 10 percent of all African American and Latino families who received a home loan in 2005 will be affected by subprime foreclosures.
- Women are more likely to receive subprime home mortgage than men and these higher rates of subprime lending make it harder for households headed by women to build wealth through homeownership.
- In 2005, about a third of women took out mortgages with interest rates over 7.66 percent (well above the average prime mortgage rate of 5.87 percent) compared to about a quarter of men, according to a new study released today by the Consumer Federation of America.
- Economist John Tuccillo, the former chief economist for the National Association of Realtors recently addressed the Wisconsin Bankers Association and said that over one trillion of adjustable mortgages will
- Reset to higher rates in 2007 and stated that those who do not refinance could see payments increase by 25 percent. Tuccillo also warned that how these homeowners cope with the payment increase could trickle though the economy.
- The National Association of Realtors told a Senate panel that NAR supports stronger anti-predatory lending legislation and more consumer education on nontraditional mortgage products.
- A new study by an industry watch group claims that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime loans outstanding will result in a foreclosure.
- A prepayment penalty lock borrowers into the higher-cost subprime market or forces you to give up equity that you have built through homeownership, but the prepayment penalties turn out to offer no benefit to borrowers in the form of lower rates, as the subprime industry has claimed. The abuse of prepayment penalties operate as a hidden fee that disproportionately homeowners.
- Center for Responsible Lending (CRL) found that 30-year subprime purchase loans with prepayment penalties carried an interest rate 40 basis points higher than would otherwise be expected. Applying CRL's research findings to 2003 subprime purchase loans, researchers estimated that during the life of these loans, Americans will pay up to $881 million in extra interest on purchase loans with prepayment penalties.
- Prepayment penalties are evidenced in 70 to 80 percent of all subprime home loans, while almost nonexistent in the prime mortgage markets. Since subprime lending now accounts for one out five mortgage loans, the different practices in the subprime market come at a staggering cost.
- In the fourth Quarter of 2006, 30-year fixed mortgage rates averaged 6.2 percent, four-tenths of a percent lower than in the third quarter. Freddie Mac expects 30-fixed mortgage rates to average between 6.3 and 6.5 percent over 2007 and initial rates on 1-year Treasury-indexed ARMs to hover near 5.5 percent.
- While interest rates are expected to be flat or up slightly in 2007, there are roughly $500 billion in outstanding first-lien adjustable-rate mortgages that will see a monthly payment increases due to an interest-rate reset, the start of amortization, or both, in 2007, and a large number of homeowners with second liens that adjust each month depending on changes in the prime rate. We expect that many borrowers facing payment increase this year will refinance prior to their payment adjustment.
- Freddie Mac recently released its refinance activity for the first quarter of 2006. Although refinance transactions fell, the number of cash out refinance transactions fell, the number of cash out more than half of the refinance transactions resulted in the borrower increasing their interest rate.
- According to Freddie Mac's quarterly refinance review, a whopping 90% of all refinance transactions originated in the third quarter were cash out transactions. This percentage is up from the second quarter of 2006.
- More than one trillion in adjustable-rate mortgages set to re price upward this year, homeowners are looking at a 25 percent rise in the amount of house payments unless they refinance.
- The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.67 percent of all loans outstanding in the third quarter of 2006 on a seasonally adjusted basis, up 28 basis points from the second quarter, and up 23 basis points from one year ago, according to the MBA's National Delinquency Survey.
- According to a recently released survey, Adjustable rate mortgages are declining in popularity among consumers. The survey found that saving offered by ARMs is falling as well.
- Home prices fell in nearly half the U.S. metropolitan areas in the last three months of 2006, the most since at least 1979, according to the National Association of Realtors (NAR). But in an attempt to remain upbeat on the bad news, NAR contends that the bottom of the market has passed.
- ARMs accounted for 25 percent of loan applications in November 2006, according to Freddie Mac's Primary Mortgage Market Survey. Since 1995, the first year that Freddie Mac collected ARM share data, the ARM share has fluctuated between an annual low of 11 percent in 1998 and a high of 33 percent in 2004.
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