Mortgage Informer

Bank of America is taking a major step to help some of its most troubled mortgage borrowers. The bank says it will forgive up to 30 percent of some customers’ loan principal.

The bank has said Wednesday it will start forgiving principal for homeowners who owe more than 120 percent of their home’s value.

The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal when home values drop well below the amount owed. The effort is aimed at preventing foreclosures.

Mortgage lending to house buyers is still subdued, according to the British Bankers’ Association.

Its latest figures show that the number of mortgages approved in February by the big banks was 35,275,

This was only slightly higher than in January when 35,154 loans to home buyers were approved.

The BBA said the market was still depressed by a rush by buyers to beat the end of the stamp duty holiday at the end of last year.

Signing up for the government’s mortgage assistance program comes with a nasty surprise for some homeowners: lower credit scores.

For borrowers making payments on time but on the verge of default, the Obama administration’s loan modification program can reduce their credit score as much as 100 points.

That makes it harder to get a loan and can present a problem when applying for some jobs.

Housing counselors say it’s unfair, and often comes as a big surprise to homeowners.

“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” asked Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group.

Bank of America refinance mortgage rates have been very low for the last several months and it looks as if that will stay the same for a little while longer. The 10 year treasury rate yield recently broke below its 50 day moving average which means home loans are likely to move lower. March 18th is currently see 30 year fixed mortgage rates around 4.75%.

Bank of America and most mortgage lenders have worked very hard to promote their home loans division. When doing any personal finance research online you are likely to see advertisements for low mortgage interest rates. Unfortunately, it seems as if most Americans have either refinanced if they can or are unable to.

The number of Chicago-area homeowners who have received permanent mortgage loan modifications under the federal Home Affordable Modification Program increased by 50% in February, but the pace at which temporary modifications are being granted appears to be slowing.

The shift is by design. For the past few months, the Obama administration has pressured mortgage servicers to speed up the rate at which they are making temporary HAMP modifications permanent. It also has altered the guidelines and wants servicers to grant trial modifications based on full documentation, rather than a borrower’s stated income, to make it more likely that borrowers can have their temporary loan terms made permanent.

Long-term U.S. mortgage rates stayed below 5 percent for the second straight week, according to Freddie Mac’s weekly rate report.

About 90,000 distressed borrowers have lost their mortgage aid under the government’s foreclosure prevention plan, and many more are at risk of losing the help, according to Treasury Department data released Friday.

Many of those borrowers did not turn in required documents to prove they qualified for the program, which typically lowers mortgage payments by more than $500 a month. Some applicants earned too much under the government’s formula, while others made too little and were unlikely to be able to keep up even with the lower payments.

Mortgage rates in the U.S. declined for a second consecutive week as the number of home-loan applications rose.

The rate for 30-year fixed mortgages fell to 4.95 percent for the week ended today from 4.97 percent, Freddie Mac said in a statement. The average 15-year rate was 4.32 percent, according to the McLean, Virginia-based mortgage buyer.

The Federal Reserve is winding down a program to purchase as much as $1.25 trillion in securities backed by U.S. home mortgages. The plan helped reduce rates over the last year, driving borrowing costs for 30-year fixed home loans to a record low of 4.71 percent in December. Mortgage rates may rise as the Fed program ends at the end of the month, said George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio.

U.S. foreclosure filings declined by 2 percent in February at 308,524 properties compared to the previous month, and up 6 percent from a year ago – the smallest annual increase in four years, according to RealtyTrac’s latest monthly update.

One in every 418 U.S. households received a foreclosure filing in February, including default notices, scheduled auctions and bank repossessions, reported the online foreclosure resource.

Even though it was the smallest jump in four years, “it still marked the 50th consecutive month of year-over-year increases in foreclosure activity,” said James J. Saccacio, chief executive officer of RealtyTrac.

A group of investors in mortgage-backed bonds dubbed the Mortgage Investors Coalition (MIC) recently submitted to Congress a plan to overhaul the refinancing of underwater borrowers by writing down the principal balances of both first and second mortgages. The confederation of insurers, asset managers and hedge funds hope to break a logjam between Washington DC and the four megabanks with the most exposure to writedowns on second lien mortgages, including home equity lines of credit.