Homeowners Are Running From Their Mortgage

NORFOLK, Va. - Nov. 12, 2013 - PRLog -- Despite housing market woes inflicted by unemployment, falling home prices and foreclosures, there’s some uplifting news. Loan rates remain at record lows, continuing to entice potential homeowners with the deal of a lifetime.

That hasn’t unleashed a drove of buyers into the market. At least, not yet. Consumers are still anxious about the economy, the housing market and employment, and they are playing safe.

But, if you are shopping, this would be the time to invest in a home. The rates probably won’t get better than this.

Rates on a 30-year-fixed mortgage slipped slightly this week to 3.98 percent from 3.99 percent last week, according to mortgage giant Freddie Mac. In February, at 3.87 percent, the rates dropped to the lowest in history.

According to Freddie Mac, mortgage rates on 15-year loans dropped to 3.21 percent from 3.23 percent last week. Last year, 15-year fixed mortgages touched 3.13 percent, the lowest on record.

The low rates have helped bring some cheer to an otherwise gloomy market that has been battered repeatedly by an economy on crutches. Builders are slowly gaining confidence and applying for more permits to build homes and apartments. Buyers, too, are showing more interest.

But, we are still far from the market’s golden years. Anxious consumers are preferring to rent rather than buy, foreclosures continue to rain on the market and home prices still haven’t stabilized. The road to recovery continues to be a long one.

If you’ve been really late on your mortgage payments and wondering why the banks aren’t breathing down your neck yet, you are not alone

Banks are moving slowly on foreclosure proceedings and evictions.

This year, U.S. banks arrived at an agreement with state attorneys general regarding deceptive foreclosure practices that got many homeowners evicted. During the course of the investigation, banks halted foreclosure proceedings, so when they finally arrived at a settlement many believed there would be a flood of foreclosures choking the market.

But the settlement hasn’t triggered a repossession of homes. Neither has it unleashed more cheap homes into the market.

In fact, delinquent mortgage borrowers are getting a breather with banks in no hurry to kick them out of their homes, according to Bloomberg.

Foreclosures dropped 15 percent in February when compared to the previous month and 15 percent from a year ago, Bloomberg said. Sales of foreclosed properties were also sluggish.

The average number of days since a borrower made his or her last mortgage payment rose to 667. That’s up 7 days when compared to 660 the month before. What this also means is that a borrower could continue to live in a home without getting evicted despite not making any payments for nearly two years.

According to Bloomberg, this trend could continue for a while. Part of the agreement between banks and the state attorneys general requires lenders to provide borrowers with detailed information on delinquent loans, including payment history and evidence that the bank has a right to foreclose, Bloomberg said. The paperwork drags down the process providing short-term relief to homeowners. But in the long run, this means it could take a while for the market to get rid of homes in trouble. Until the shadow inventory gets sorted, the dark cloud of foreclosure will continue to weigh down the housing market.

Chinese Buyers Making a Beeline for U.S. Properties
While Americans are struggling with strict lending practices, joblessness and a frigid economy, Chinese buyers are arriving on U.S. shores in droves and buying up luxury homes, hotels and expensive commercial real estate, according to USA Today.

They are investing in properties in New York, Los Angeles, San Francisco, Florida and Nevada. And they are often paying in cash.

As the housing boom ended in a bust a couple years ago, foreign buyers suddenly began lining up to own a piece of the American Dream. For the Chinese, investing here becomes even more appealing as their currency – the yuan – keeps rising and empowering investors with more purchasing power, USA Today says.

“For China, the world is an emerging opportunity,” Andrew Taylor, founder of Juwai.com, a real estate site based in Hong Kong that was launched in 2011 to match Chinese buyers with U.S. real estate, told USA Today. “We’re talking about a huge chunk of people with cash and the desire” to invest overseas.

Following Canadians, Chinese are now the second-largest foreign buyers of American Homes, according to the report. Chinese investors chalked up $7.4 billion in sales in the year ended March. That’s a 24 percent increase when compared to the previous year.

Will Mortgage Rates Drop Lower?

Is it really wise to refinance or buy a home now, or will mortgage rates drop lower?

The Federal Reserve talks about being dedicated to keeping mortgage rates down, and a few experts say there is the possibility that interest rates could dip slightly before going higher. However, we have already been enjoying record-breaking low mortgage rates for quite awhile. So perhaps the best question isn’t “Will mortgage rates drop lower?” but “When will mortgage rates spike higher?”

Of course, in reality mortgage interest rates could start going up dramatically at any time. Mortgage lenders and banks certainly aren’t making money loaning in the current market even if they want to lend. Mortgage giant Freddie Mac has already come under fire for betting against homeowners and is heavily invested in not seeing people refinance at today’s low rates. You wondered why it was really so tough to get a mortgage loan right now?

Thankfully, being an election year, mortgage rates shouldn’t spike too high between now and November, even though the Mortgage Bankers Association has predicted over a half percentage increase between now and the fourth quarter.

Wait..there's more bad news!

Unfortunately for those who wait, even if mortgage rates do go down or stay steady, loan costs are on the increase. New regulations resulting in a bigger burden and more work for lenders along with a spike in the housing market is likely to see lenders increase fees. On top of this, the government has been quietly passing legislation requiring higher costs on conventional loans and “affordable” FHA loans. For FHA borrowers this will likely mean an increase of around $200 a year depending on the loan amount and almost half a point to the rate or fees of Fannie Mae and Freddie Mac guaranteed loans. Yes, this is the same administration doing everything it can to help desperate homeowners and boost the housing market.


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