Mortgage Informer

Interest rates on 30-year fixed-rate mortgages dropped in the latest week, a move that bodes well for the hard-hit housing market as it copes with the absence of government support.

Lower interest rates on mortgages should buoy refinancing, putting more cash into consumers’ hands to funnel into the economy. They also make homes more affordable during the spring selling season, the industry’s most important period.

Mortgage rates for 30-year fixed mortgages, the most widely used loan, were 4.70 percent Tuesday afternoon, down from 4.79 percent compared to the same time last week.

Federal Reserve policy makers last month said they were in no rush to sell $1.1 trillion of mortgage-backed securities, with a majority preferring to wait until after the central bank starts raising interest rates.

“Most participants favored deferring asset sales for some time,” while others wanted to announce a schedule or start sales soon, the Fed said in minutes of its April 27-28 meeting in Washington, released today. Officials lowered their projections for inflation, excluding food and fuel, while keeping forecasts little changed for economic growth and unemployment in 2011 and 2012.

U.S. mortgage rates were little changed as the Federal Reserve restated its plan to keep interest rates low for an “extended period.”

Rates for 30-year fixed loans slipped to 5.06 percent in the week ended today from 5.07 percent last week, Freddie Mac said in a statement. The average 15-year rate was 4.39 percent, the McLean, Virginia-based mortgage finance company said.

The Federal Open Market Committee said yesterday that U.S. economic conditions are likely to warrant “exceptionally low” interest rates for an extended period. Low interest rates have bolstered demand for housing by making mortgage payments more affordable. Home sales may slump after a tax credit for some buyers expires tomorrow, said Brad Hunter, chief economist at real estate research firm Metrostudy.

Unfortunately, many Americans are greatly struggling when it comes to making their mortgage payments. President Obama and his staff have worked very hard to assist Americans and one way was to create the Obama mortgage bailout and refinance plan. The Making Home Affordable loan modification program has helped many struggling homeowners to lower their monthly mortgage payment to a more moderate level.

By contacting your mortgage lender or going through the Making Home Affordable website you should be able to find out if you qualify for a home loan modification. It is very important to understand that getting a permanent mortgage modification takes a lot of time and hard work. Some borrowers have had to submit up to six months of documents before getting a permanent modification.

According to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey for the week ending April 16, the Market Composite Index increased 13.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13.9 percent compared with the previous week.

“Treasury rates fell last week causing a decline in mortgage rates. As a result, refinance applications picked up over the week, as some borrowers took advantage of this recent rate volatility to lock in a low fixed-rate loan,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the homebuyer tax credit, and are up modestly over last month.”

U.S. mortgage applications bounced from three-month lows last week as potential buyers locked in lower borrowing costs before the federal tax credit expires, the Mortgage Bankers Association said on Wednesday.

Thirty-year mortgage rates dropped to hover around 5 percent, stoking home loan demand after applications slid for two straight weeks.

Refinancing picked up by 15.8 percent to represent 60 percent of all applications last week.

Demand for loans to buy a home increased 10.1 percent to send the industry group’s total applications index up 13.6 percent on a seasonally adjusted basis.

Financial regulators in Britain and Germany said Monday that they will open investigations to see whether Goldman Sachs’s sale of mortgage securities broke any local laws after the disclosure that two European banks lost money on what U.S. officials allege were fraudulent deals.

London’s Financial Services Authority and Germany’s BaFin regulatory agency said they were coordinating with the U.S. Securities and Exchange Commission’s investigation of Goldman’s sale of an investment that, the SEC charges, was structured to fail.

The Royal Bank of Scotland lost an estimated $850 million and the Duesseldorf-based IKB Deutsche Industriebank lost more than $100 million on mortgage-related securities set up by Goldman.

The market for mortgage-backed securities that don’t come with a guarantee from Uncle Sam is finally coming back. But the first deal off the rack in 2010 looks quite different from those sold at the peak of the housing boom.

Redwood Trust Inc. disclosed that it plans to issue about $222 million of bonds backed by home-mortgage loans made by a unit of Citigroup Inc. over the past 11 months. The market for new issues of such “private label” mortgage securities—ones that aren’t guaranteed by Fannie Mae, Freddie Mac or any other government-related entity—has been virtually dead for the past two years since a surge in defaults caused investors to flee.

Mortgage lending in the United Kingdom rose 24 percent in March from month-earlier levels, or 3 percent above March 2009, the Council of Mortgage Lenders said Monday.

It marked a strong ending to a downbeat first quarter, when gross lending of 29.5 billion pounds ($45 billion) was 24 percent lower than the previous quarter and 9 percent lower than than the same period a year earlier.

Comparisons are skewed by a rush of buying at the end of 2009 to beat a tax increase, and a consequent drop in activity immediately after the new year.

Recent changes to the Obama administration’s mortgage assistance program may make it more vulnerable to fraud, a government watchdog says.

The changes, announced last month, are intended to make it easier for struggling homeowners to avoid foreclosure. But the administration hasn’t done enough to warn the public about fraud and hasn’t included sufficient safeguards to prevent abuse, the special inspector general for the Troubled Asset Relief Program, or TARP, said.

“Criminals feed on borrower confusion, and frequent changes to the programs provide opportunities for experienced criminal elements to prey on desperate homeowners,” inspector general Neil Barofsky wrote in a quarterly report issued Tuesday.