Refinance Free Credit

New home sales fell more than expected during January as buyers stayed away in droves from a U.S. housing market in the midst of a historic downturn.

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Sales fell 2.8 percent to a seasonally-adjusted rate of 588,000, compared to a 605,000 revised rate for December, the Commerce Department said Wednesday.

According to Bloomberg, economists had projected a 600,000 rate for January.

Inventory fell to 482,000 new homes, but the drop in inventory wasn’t enough to outpace the sharp drop in sales volume.

The result was a further rise in the relative supply of new homes, which reached a level of 9.9 months at the current sales rate in January, according to the report. The Calculated Risk blog notes that the sales report is “very weak,” likely alluding to the increased supply. The graph to the right, used with permission, provides a historical look at new housing supply.

Months of supply is now at its highest level since 1981, likely signaling a further pullback in housing starts from builders in the months ahead.

After years of paying for a mortgage many find that they are sick of high payments and most of the time they want to lower their bills. A great way to achieve lower bills is by refinancing your mortgage. When you refinance a mortgage you are hoping to get a lower rate and payment by extending the length of your mortgage. Getting a higher amount of funding can be difficult if you have any scratches to your financial record. The ideal way would be to get a higher amount of lending at the same monthly payments. Lending companies will not be prepared to offer you more money with lower payments.

Refinancing

Knowing about the option to refinance can be very helpful in lowering your monthly payments and getting you a better rate. When people have a mortgage most of the time they make a decision to refinance the amount of money that they have left on their mortgage for the same length or a short time period. Doing this can lower your monthly payments by a great amount saving you more over time. Most find that by refinancing they can get the money that they need to pay bills. Refinancing is also a great way to build equity in the home that you have a mortgage for or drawing on equity that you already have in the home.

What is Cash-Out Refinancing?

When one has equity within a house they have a lot of options when it comes time to refinance. A common way to receive funds on the equity built in your home is by cash-out refinancing. With this option you are able to get the cash that you need after closing. This is a great way to cover needs such at education costs, home improvement costs, debt consolidation, or a down-payment on a second home. Lenders typically require that the home owner have a minimum percentage of equity that has accumulated in the home. For more information on equity take a look here for some useful information.

Things to Know About Refinancing

• Lower interest rates can be obtained.
• Equity can be built faster by refinancing.
• Refinancing can get you a different type of loan.
• By refinancing you can get the money that you need.

Additional Resources

• Refinance
• Questions about refinancing a mortgage?

After years of paying for a mortgage many find that they are sick of high payments and most of the time they want to lower their bills. A great way to achieve lower bills is by refinancing your mortgage. When you refinance a mortgage you are hoping to get a lower rate and payment by extending the length of your mortgage. Getting a higher amount of funding can be difficult if you have any scratches to your financial record. The ideal way would be to get a higher amount of lending at the same monthly payments. Lending companies will not be prepared to offer you more money with lower payments.

Refinancing

Knowing about the option to refinance can be very helpful in lowering your monthly payments and getting you a better rate. When people have a mortgage most of the time they make a decision to refinance the amount of money that they have left on their mortgage for the same length or a short time period. Doing this can lower your monthly payments by a great amount saving you more over time. Most find that by refinancing they can get the money that they need to pay bills. Refinancing is also a great way to build equity in the home that you have a mortgage for or drawing on equity that you already have in the home.

What is Cash-Out Refinancing?

When one has equity within a house they have a lot of options when it comes time to refinance. A common way to receive funds on the equity built in your home is by cash-out refinancing. With this option you are able to get the cash that you need after closing. This is a great way to cover needs such at education costs, home improvement costs, debt consolidation, or a down-payment on a second home. Lenders typically require that the home owner have a minimum percentage of equity that has accumulated in the home. For more information on equity take a look here for some useful information.

Things to Know About Refinancing

• Lower interest rates can be obtained.
• Equity can be built faster by refinancing.
• Refinancing can get you a different type of loan.
• By refinancing you can get the money that you need.

Additional Resources

• Refinance
• Questions about refinancing a mortgage?

Fannie Mae and Freddie Mac, the two largest financiers for the U.S. mortgage market, will see their portfolio growth caps removed as of March 1, 2008.

According to a statement released by the Office of Federal Housing Enterprise Oversight, which regulates both GSEs and had imposed the portfolio restrictions in response to massive accounting errors, the move comes as “recognition of the progress being made by both companies, as indicated by the timely release of their 2007 audited financial statements.”

Fannie Mae reported 2007 earnings earlier today; Freddie Mac is scheduled to release its annual earnings report tomorrow.

OFHEO also said it was further considering lifting a Consent Order that required Fannie and Freddie to maintain a capital level at least 30 percent above the statutory minimum. The Order agreements, reached in 2004, were designed to provide a cushion due to financial and operational uncertainties associated with past accounting problems.

The regulator said it will look to gradually decrease the 30 percent requirement in the months ahead.

Doug Duncan, the often-colorful chief economist that rose to industry prominence with the Mortgage Bankers Association, is moving to a similar role at Fannie Mae. The GSE on Tuesday named Duncan vice president and chief economist after 15 years at the MBA, where Duncan often served as the organization’s most visible spokesperson.

“His counsel and scholarship will be important assets for the company as we strive to bring stability, liquidity and affordability to the turbulent housing and mortgage markets,” said Fannie Mae CEO Daniel Mudd. “I also hope that, given Doug’s role at the MBA, he will provide us with critical insights so that we can better serve our partners and customers in the years ahead.”

In addition to leading economic, housing and mortgage forecasting efforts at the GSE, Duncan will provide regular economic commentary and serve as a primary spokesperson on the economy and the housing and mortgage markets for the company.

“Leaving MBA after 15 years is a tough decision given its prominence and influential position in the industry,” Duncan said. “However, the opportunity at Fannie Mae is to join another influential firm at a critical time in the real estate finance markets. I look forward to making a positive contribution to the ability of Fannie Mae to support the housing markets.”

MBA president Jonathan Kempner said that the MBA will miss Duncan’s influence.

“With his balanced and level-headed approach, Doug has become a household name for anyone trying to understand the dynamics of the real estate market,” he said. “For that reason, he will of course be sorely missed.

Duncan will join Fannie Mae in April.

Week over week refinance applications are down 30.4% as mortgage interest rates continue to rise on fears of inflation.  They are up slightly at 5% above 2007 levels.  Rates are up almost a full 20 basis points (.18%).  The slowdown in refinance applications makes sense in light of the recent wild swings of the mortgage market.  With rates headed decidedly higher coming off a 4-year low point.  If you were gambling on mortgage interest rates going lower a couple of weeks ago when we were looking at that low and telling you to lock some extremely good rates you have lost.  Sorry.

More on the weekly interest rate changes from Market Watch:

The interest rate charged on 30-year fixed-rate mortgages averaged 6.27% last week, up from 6.09% the previous week, while the average on the 15-year fixed-rate mortgage increased to 5.77% from 5.55%. The one-year ARM averaged 5.84% last week, up from 5.72%.

Fannie Mae said Wednesday that it lost $3.6 billion during the fourth quarter as credit conditions took a large toll on the government-sponsored enterprise. The quarterly loss pushed Fannie to a $2.1 billion loss, or $2.63/share, for the full year.

Earnings woes at the largest GSE were driven primarily by mark-to-market activity on derivatives holdings, leading to $3.2 billion in write-downs; Fannie also absorbed a $2 billion charge in building its credit loss reserves and an additional $600 million in impairment losses on mortgages and investments it moved into its held-for-sale portfolio.

Despite the losses, Fannie saw its single-family guaranty market share nearly double in the fourth quarter, reaching 48.5 percent compared to 24.6 percent share one year earlier. Guaranty fee income — the fee Fannie charges lenders to put its guaranty on a loan — jumped 26.4 percent as well. Fannie Mae boosted its guaranty fee to the highest level in at least a decade last November.

“Market dynamics, including declining interest rates and credit market illiquidity, had a pronounced impact on our bottom line in the fourth quarter of 2007,” executive vice president and CFO Stephen M. Swad said. “A substantial portion of losses in ‘07 came from mark-to-market valuation declines you would expect in a mortgage and credit market this volatile.”

Saying that the company was “working through the toughest housing and mortgage markets in a generation,” CEO Daniel Mudd said that defaults were particularly problematic, even within its prime mortgage portfolio. The number of properties Fannie acquired through foreclosure increased by 34 percent in 2007 over 2006, while loan loss severity more than doubled.

A bearish turn, and walk-aways
Fannie Mae’s expectations for 2008’s housing market have become significantly more bearish, as well. The GSE said it now expects to see nationwide price declines of 5 to 7 percent during the year, compared to the 4 to 5 percent decline it had estimated earlier. Likewise, the total estimated peak-to-trough price decline is expected to be 13 to 17 percent, compared to the 10 to 12 percent that Fannie had earlier expected.

As a result, estimates of credit losses took a fairly large jump as well, with Fannie saying it expected a credit loss ratio of 11 to 15 basis points on its guaranty book of business for 2008; earlier estimates provided by the company had pegged that ratio at 8 to 10 basis points.

But perhaps the most interesting aspect of Fannie Mae’s forecast was a nod to borrowers walking away from their mortgages. The company said that estimating credit losses for 2008 was “uniquely challenging,” citing in part “patterns of consumer behavior that deviate from historical patterns” as a driver of “extreme uncertainty around key factors” in its forecast.

Notes

The full 10-K filed with the SEC was a mind-numbing 98 pages in length … Countrywide Financial accounts for 28 percent of Fannie Mae’s single family business volume in 2007, and a combined BofA/Countrywide would boost that number to 32 percent of the GSE’s total business … Fannie purchased 11,997 loans worth $1.8 billion in UPB out of MBS trusts during Q4, up from 7,637 loans worth $899 million one year earlier … Freddie Mac is scheduled to report its earnings tomorrow.

We’re bringing back the Mortgage Market Minute. In this video I talk Case-Shiller, Countrywide eliminating option arms on the wholesale side, and Wells Fargo whacking LTV’s in California.

Bear with us as we get back up to speed and stay tuned for more video from Blown Mortgage.

Big hat tip to reader Don for sending this along.  Wells Fargo has named nearly every California county a “Severely Distressed Market” which requires LTV reductions of 5% for any conforming loan over 75% LTV and also eliminates financing over 75% LTV for any non-conforming loan.  The Wells Fargo Mortgage Express product (which is Wells Fargo’s stated income/stated asset program) is also not permitted in “Severely Distressed Market” areas.

Look for the rest of the market leaders to quickly follow suit.  This immediately puts a huge swath of the state with increasingly limited refinance options.  A huge portion of California loans are of the non-conforming variety and well over the 75% LTV mark (especially factoring in the major price drops over the last 16 months).  This does not bode well for the folks in the Golden State.

Here’s a link to the entire PDF of the Wells Fargo product changes and below I’ve posted a list of the California counties listed in the changes.

No word on whether this is a wholesale-only change or across the company.  If you know please drop us an email.